Banking Crisis Escalates Ahead of CPI Inflation Report; Schwab in focus

Dow Jones futures were higher ahead of Tuesday’s open as the banking crisis continues to escalate, with two major bank failures in recent days — SVB Financial (SIVB) and Signature Bank (SBNY). Meanwhile, Schwab shares fell 11% on Monday on growing liquidity fears, while Tesla shares rose after the company increased hiring at its Gigafactory in Texas. And GitLab crumbled 36% late on earnings.


Financial crisis

The SPDR S&P Regional Banking ETF ( KRE ) plunged more than 12% Monday, even after paring some losses. That’s on top of the 16% loss it had last week.

Regional bank First Republic (FRC) crashed nearly 62%. KeyCorp ( KEY ) plunged 27.3%. And Western Alliance (WAL) crumbled 47%.

Charles Schwab ( SCHW ) fell on fears that the largest U.S. brokerage will have to sell some of its bond holdings to cover deposit payouts. Schwab stock’s drop at its worst point of the day would be the biggest percentage drop ever (based on data going back to Sept. 23, 1987), according to Dow Jones.

Large US banks were not spared from selling either Bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) decreasing 5.8%, 1.8% and 7.1% respectively.

CPI Inflation Report, Earnings

On the economic front, eyes will be on the consumer price index on Tuesday. CPI is expected to rise 0.4%, both overall and excluding food and energy. That would bring headline CPI inflation down to 6% from 6.1% in January, with core inflation falling to 5.5% from 5.6%.

Wall Street suddenly sees a solid chance the Federal Reserve will pause its rate hike campaign at next week’s meeting as the failure of three banks raises concerns about broader financial sector stress.

Half-point moves are now off the table – just a week after Fed Chairman Jerome Powell signaled that policymakers were ready to accelerate rate hikes at next week’s meeting from February’s quarter-point pace.

Now, a sharp dip in government interest rates suddenly signals doubts about the strength of the economy. Even if the Fed doesn’t pause next week, markets are betting interest rate cuts are just around the corner.

On the earnings front, GitLab ( GTLB ) tumbled 36% in extended trade after the company’s weaker-than-expected revenue guidance.

Earnings continue to trickle out at the end of the season this week. Among them are Academy sports and outdoors (ASO), Adobe (ADBE), Dollar General (DG), FedEx (FDX), Five below (FIVE) and Lennar (LEN).

Stock market today

On Monday, the Dow Jones Industrial Average fell 0.3% and the S&P 500 lost 0.15%. The tech-heavy Nasdaq Composite rose 0.45% in a day of volatile trading.

Electric car giant Tesla ( TSLA ) rose 0.6% Monday. Among Dow Jones stocks, Apple ( AAPL ) rose 1.3% and Microsoft ( MSFT ) rose 2.1% in today’s stock market action.

Social media giant Meta platforms (META), the IBD Leaderboard watchlist stock Palo Alto Networks (PANW) and New relic (NEWR) – as well as Dow Jones stocks Nike (OF) and Sales force ( CRM ) — is among the best stocks to watch in the new stock market correction.

Palo Alto is an IBD Leaderboard Watch List stock. New Relic was recently an IBD Stock Of The Day. And Nike featured in this week’s column Stocks near a buy zone.

3 Top Growth Stocks to Buy and Watch in Current Stock market correction

Dow Jones Futures Today: Oil Prices, Treasury Rates

Ahead of Tuesday’s opening bell, Dow Jones futures were up 0.5% and S&P 500 futures were up 0.6%. Nasdaq 100 futures rose 0.65% versus fair value. Keep in mind that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.

The 10-year US Treasury yield dipped to 3.51% on Monday as safe-haven trading pushed bonds up sharply following the SVB collapse. Oil prices sold off from Monday after Friday’s brief rally. West Texas Intermediate futures fell nearly 3% to trade below $75 a barrel. barrel.

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What to do in the new stock market correction

Now is an important time to read IBD’s The Big Picture column, with the stock market trending back into a “correcting market” after heavy losses in recent sessions.

Friday’s Big Picture column commented, “IBD changed its market outlook to ‘uptrend under pressure’ on Thursday. And after Friday’s selloff, we’ve cut our outlook further to ‘market in correction.'” This calls for investors to avoid buying stocks and turn to defensive trading , such as taking profits and reducing losses.”

(Check IBD stock lists like the IBD 50 and Stocks Near a Buy Zone for additional stock ideas.)

Five Dow Jones Stocks to Watch Now

Dow Jones stocks to watch: Nike, Salesforce

Since the Oct. 3 bottom, Nike shares are up as much as 59% to their most recent high of 131.31. Now, the stock is consolidating within a flat base that offers a buy point at 131.41, according to IBD MarketSmith pattern recognition.

Amid the recent weakness, the stock is below its 50-day moving average, an important benchmark. A decisive repeat would be bullish for the base-building outlook as it carves out the right side of the pattern. The relative strength line is also holding up well during the rapidly developing stock market correction.

In recent weeks, Dow Jones leader Salesforce showed major upside strength after strong fourth-quarter results. But those gains have mostly disappeared amid recent market weakness, and now the stock is back below a 178.94 cup-with-handle entry. Still, the stock’s recent strength is a reason to monitor the software leader in the coming sessions.

Top stocks to watch: Meta, Palo Alto, New Relic

Facebook parent Meta Platforms is quietly building a flat base with a buy point at 197.26 after an earnings-driven price rally in February. Shares are about 8% away from a recent buy point, as they rose 0.8% on Monday.

Back story: Like social media rivals, Meta is struggling due to a sharp reduction in ad revenue as clients reel over macroeconomic concerns, recession fears and higher interest rates. This comes as it spends billions on a risky bet to build the “metaverse,” a virtual reality world that has yet to catch on.

IBD Leaderboard Watchlist stock Palo Alto Networks continues to trade quietly in a handle following the stock’s 12.5% ​​gain on Feb. 22. Shares remain within striking distance of a base’s 192.94 buy point. Bullishly, the share’s relative strength line is at new heights, as the share significantly outperforms the market averages. PANW shares rose 0.1% on Monday.

Back story: On Feb. 21, the cybersecurity giant announced strong results for the quarter that ended in January, with earnings hitting $1.05 per share. stock, up 81% from a year earlier, with a 26% jump in revenue to $1.7 billion.

The latest IBD stock of the day, New Relic, is working on a flat base with an 80.98 buy point in the wake of the February 8 earnings-driven rally. The RS line lasts until now. NEWR stock fell 0.7% on Monday.

Back story: New Relic provides a cloud-based suite of software products that enable organizations to collect, store and analyze massive amounts of data in real time. Customers gain increased visibility into their enterprise software to help make data-driven decisions.

Join IBD experts as they analyze leading stocks in the current stock market correction on IBD Live

Tesla stock

Tesla shares rose 0.6% on Monday as it continues to see some support around its 50-day moving average. Shares closed Monday about 55% off their 52-week high.

On Tuesday, weekly Chinese EV insurance registration data could be a key measure of Tesla demand in the world’s biggest electric market, which is in the middle of a huge price war started by Tesla.

Dow Jones Leaders: Apple, Microsoft

Among the Dow Jones stocks, Apple shares rose 1.3% on Monday, snapping a two-day losing streak and finding support at the long-term 200-day line.

Microsoft shares bullishly regained its 200-day line during Monday’s 2.1% jump. The stock is still about 20% off its 52-week high after recent declines.


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