First Republic Deal Doesn't Move Stocks

Shares of JPMorgan Chase rise 2% after purchase
By Newser Editors and Wire Services
Posted May 1, 2023 4:03 PM CDT
First Republic Deal Doesn't Move Stocks
A Chase Bank location in Warrington, Pa., on Monday. Chase bought much of First Republic's assets.   (AP Photo/Matt Rourke)

The latest historic US banking failure made few waves in markets, and stocks drifted Monday as Wall Street braces for what it hopes will be the last hike to interest rates for a long time. The S&P 500 was virtually unchanged after regulators seized First Republic Bank and sold off most of it in hopes of preventing more turmoil in the industry, the AP reports.

  • The Dow Jones Industrial Average fell 46.46 points, or 0.1%, to 34,051.70.
  • The S&P 500 fell 1.61 points, or less than 0.1%, to 4,167.87.
  • The Nasdaq composite fell 13.99 points, or 0.1% to 12,212.60.
First Republic has been in the spotlight for nearly two months on worries it could be next to topple following March's failures of Silicon Valley Bank and Signature Bank. The worry was that runs on smaller and mid-size banks could take down the economy, like the financial industry's woes during the 2008 crisis did.

But analysts and economists have said they see big differences between then and now, including how the biggest US banks are feeling less pressure this time around. Plus, several banks under scrutiny for weakness recently have said their deposit levels have strengthened since late March. Analysts said the difference between the stock market's reactions to them and First Republic Bank, which plunged 75% last week, indicates investors may see it as an isolated event rather than a problem with the deeper system. Shares of JPMorgan Chase, which is buying much of First Republic's assets, rose 2.1%. It’s becoming even bigger following the deal.

Still, many other questions continue to hang over Wall Street that could shake things up. They include worries about corporate profits and the federal government's latest squabble over the country's debt limit. Above all is what the Federal Reserve will do with interest rates. At its next meeting, which concludes Wednesday, most traders expect the Fed to raise short-term rate by another quarter of a percentage point, up to a range of 5% to 5.25% from virtually zero early last year. The hope is that may be the final increase for a while, which would give the economy and financial markets more breathing room.

(More stock market stories.)

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