 |
| S&P 500 Index Rises Ahead of FOMC Meeting and Credit Suisse Takeover by UBS |
The S&P 500 index started the week positively, rising by 0.4% in early trading, indicating the market's interest in value stocks ahead of growth, following last week's sell-off in banking stocks. The Swiss government and central bank organized a buyout of Credit Suisse by UBS, which creates a financial giant with around $5tn in assets globally and $1.5tn in Europe. Traders are selling riskier growth stocks and doubling down on blue chips, anticipating a bounce mid-week. The US Dollar's gains have also aided the equity market. The Federal Open Market Committee meeting, which is expected to lead to a 25-basis-point rate hike, is the week's most significant event. Besides the FOMC meeting, existing home sales data on Tuesday and Tuesday's 20-year US Treasury auction will provide the market with further insight into the banking sector.
The Swiss government's UBS takeover of Credit Suisse has lifted market sentiment, as Credit Suisse had been struggling for a long time, recording losses of $1.65bn and $7.3bn in 2020 and 2021, respectively. First Republic Bank's decision to suspend its dividend has harmed sentiment, with its stock falling 13.4%. Additionally, Moody's has downgraded the bank, saying that the largest US banks' $30bn cash deposit vote of confidence did not stop deposit losses.
The week's earnings reports include Foot Locker, Tencent Music, Nike, GameStop, EVgo, Cassava Sciences, KB Home, Chewy, Accenture, Darden Restaurants, and General Mills. Technical analysis reveals that the S&P 500 is back under the 3,950 resistance level, and the 21-day moving average will likely lead bulls to make a run at 4,000. However, there will be less movement before the FOMC's interest rate announcement on Wednesday.
