Welcome to MarketBites! Here's all you need to know about yesterday's market news.
“You should write your obituary and then try to figure out how to live up to it, it’s not that complicated"
- Vince Lombardi
PORTFOLIO MANAGER COMMENTARY
The S&P 500 closed near the flat line on Monday as investors looked ahead to pivotal inflation readings, including April’s consumer price index report. “At first glance, markets appear to be assuming a more tepid approach on Monday as they digest everything we learned last week, contemplate emerging tail risks, and prepare for more data later this week,” according to the Goldman Sachs trading desk. “A look beneath the surface reveals a bit more agitation than that first glance might reveal.” Looking forward, traders are awaiting key data that will inform the Federal Reserve’s forward path: April’s CPI report is due Wednesday, followed by the producer price index on Thursday.
In other news, select bank shares ticked higher to begin the week. Shares of PacWest gained 3.6%. This past Friday evening, the bank announced that it would cut its dividend to just 1 cent per share from 25 cents per share in the prior quarter. Western Alliance shares ended the day up about 0.6%. Big banks Wells Fargo and JPMorgan Chase also rose.
Stocks are coming off a volatile week that saw the Dow Jones average and S&P 500 notch their worst weekly stretches since March. The losses came despite a late-week rally that saw volatile regional bank stocks jump off their lows.
CHART OF THE DAY
Oil-and-gas companies have built up a mountain of cash with few precedents in recent history. Wall Street has a few ideas on how to spend it—and new drilling isn’t near the top of the list. Even as an uncertain economic outlook has weighed on crude in 2023, making the energy sector the S&P 500’s worst performer, cash has continued flowing. Companies that previously chased growth and funneled money into speculative drilling investments, weighing down their stocks, have instead tried to appease Wall Street by returning profits via boosting dividends and repurchasing shares.
Oil profits last year ballooned after Russia’s war on Ukraine pushed up prices and turned gasoline into a street-level reminder that inflation neared 40-year highs. As benchmark U.S. crude prices have dropped 11% this year, to $71.34 a barrel, international oil majors, U.S. fuel-makers, independent drillers, Texas wildcatters and Appalachian frackers have kept gobs of cash on hand—partially as insurance if the slide continues.