Day Traders Diary

5/5/23

The major averages surged to end the week as regional bank shares climbed off their lows and market-darling Apple reported better-than-expected quarterly earnings. The Dow Jones Industrial Average closed up 546 points, or 1.6%. The S&P 500 climbed 75 points or 1.9% while the Nasdaq Composite advanced 269 points or 2.2%.

Stocks rose even as April's jobs numbers came in hotter than expected. The U.S. economy added 253,000 jobs in April, while Wall Street had expected 180,000 new jobs, according to the Bureau of Labor Statistics.

Apple posted beats on the top and bottom lines for the fiscal second quarter, propelled by iPhone sales. Apple shares gained 4.6%.

The rebound for regional bank stocks was boosted by a note from JPMorgan, which upgraded Western Alliance, Zions Bancorp and Comerica to overweight. The firm said those three banks appear "substantially mispriced" in part due to short-selling activity.

The SPDR S&P Regional Banking ETF (KRE) advanced 6.5%. PacWest which is down sharply this week on news it's considering strategic options that include a sale — popped 83.8%. Western Alliance

 also jumped 45.1%.

Shares of regional banking companies have been under pressure this week, as traders fear other institutions could suffer the same fate as Silicon Valley Bank and Signature Bank. Both banks collapsed in March.

Liz Young, head of investment strategy at SoFi, doesn't believe the fallout in the regional banking sector is over despite Friday's rebound. "When the whole news cycle started, it was sort-of explained away ... as a unique circumstance for certain institutions. The reality is that liquidity is a universal challenge," Young said.

WTI Crude (JUN) settled up 4.05% on Friday at $71.34 after hitting a high of $71.81 earlier on Friday. This was the highest level since May 2nd, when WTI traded as high as $71.42

Meanwhile, WTI Crude is lower -7.09% week to date for the 3rd straight negative week and the worst week since Mar. 17, when WTI Crude lost -12.96%