Day Traders Diary

5/1/23

The major averages drifted lower this afternoon following a strong end to April last week. The Dow Jones Industrial Average fell 46 points. The S&P 500 closed down just one point at 4167 while the Nasdaq Composite  fell 13 points or 0.11%, ending at 12,212.

The day started on an ominous note as JP Morgan Chase bought and took over assets from the government's seizure of First Republic regional bank over the weekend.

JPMorgan Chase shares rose 2.1% after it emerged as the winner of a weekend auction for First Republic. The big bank has acquired all of troubled lender First Republic's deposits and a "substantial majority of assets." This deal means that JPMorgan Chase, already one of the biggest U.S. banks, will become even larger.

JPMorgan Chase CEO Jamie Dimon said that the deal resolves much of the fallout in the banking sector that has started since the sudden collapse of Silicon Valley Bank in March.

Infrastructure Capital Managment's CEO Jay Hatfield was wary that the takeover deal could quell further fallout among the regional bank stocks.

The SPDR S&P Regional Bank ETF (KRE) slipped on Monday, declining more than 2%. Zions Bancorp shares shed 3.7%, and PacWest shares tumbled 10.6%.

First Republic reported last week that deposits tumbled more than 40% in the first quarter, triggering further declines in the already struggling stock. Shares have cratered 97% since the start of the year. The stock is halted for trading as of Monday.

A slew of semiconductor stocks jumped on Monday as ON Semiconductor which popped 8% on better-than-expected earnings and optimistic guidance.

The news from ON Semi lifted the chip makers peers, with the S&P 500 industry group tracking the sector last up 1.6%, while the iShares Semiconductor ETF and PHLX Semiconductor Sector Index last up 0.9% and 0.8%, respectively.