Banking Crisis Escalates Ahead of CPI Inflation Report; Swab in the picture

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, shares of Schwab fell 11% Monday on growing liquidity fears, while shares of Tesla rose after the company ramped up hiring at its Texas-based Gigafactory. And GitLab collapsed 36% late in revenue.


Financial crisis

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

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

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

The major American banks were also not spared from the sale bank of America (BAC), JPMorgan Chase (JPM) and Wells Fargo (WFC) with 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 from 6.1% in January to 6%, while core inflation would fall from 5.6% to 5.5%.

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

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 again from February’s quarter-point pace at next week’s meeting.

Now a sharp dip in government bond yields signals sudden doubts about the strength of the economy. Even if the Fed doesn’t pause next week, markets are betting that rate cuts are imminent.

In terms of revenue, GitLab (GTLB) fell 36% in extended trading following the company’s weaker-than-expected revenue guidance.

Earnings are still trickling down this week at the end of the season. being among them Academy Sport & Outdoors (ASO), Adobe (ADBE), Dollar General (DG), FedEx (FDX), Five below (FIVE) and lennar (LEN).

Fair today

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

Giant of electric vehicles Tesla (TSLA) was up 0.6% on Monday. Among the Dow Jones stocks, Apple (AAPL) rose 1.3% and Microsoft (MSFT) climbed 2.1% in today’s stock market action.

Social media giant Meta platforms (META), IBD Leaderboard watchlist stock Palo Alto Networks (PANW) and New relic (NEWR) — as well as Dow Jones stocks Nike (OR) and Sales team (CRM) — are among the top stocks to watch during the new stock market correction.

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

3 Top Growth Stocks to Buy and Watch in the CurRent Stock Market Correction

Dow Jones Futures Today: Oil Prices, Treasury Yields

Prior to Tuesday’s opening bell, Dow Jones futures were up 0.3% and S&P 500 futures were up 0.2%. Nasdaq 100 futures rose 0.2% from fair value. Remember that overnight action in Dow Jones futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.

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

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What to do with the new stock market correction

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

Friday’s Big Picture column noted, “IBD on Thursday changed its market outlook to ‘uptrend under pressure’. And after Friday’s sell-off, we further downgraded our outlook to ‘market in correction’. This requires investors to avoid stock purchases and turn to defensive trading, such as taking profits and limiting losses.”

(Check out IBD stock lists like the IBD 50 and stocks near a buy zone for additional stock ideas.)

Five Dow Jones stocks to watch right now

Dow Jones stocks to watch: Nike, Salesforce

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

Despite the recent weakness, the stock is below its 50-day moving average, an important metric. A decisive rematch would be bullish for base-building prospects, cutting the right side of the pattern. The relative strength line also holds up well during the fast-moving stock market correction.

In recent weeks, Dow Jones leader Salesforce has shown great upside after strong fourth-quarter results. But those gains have largely vanished amid recent market weakness, and now the stock is back below the 178.94 cup-with-handle entry. Still, the stock’s recent strength is a reason to watch 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 of 197.26 after a revenue-driven price hike in February. Shares are about 8% off the last buy point, rising 0.8% on Monday.

Back story: Like social media rivals, Meta is struggling due to a sharp drop in ad revenue as customers grapple with macroeconomic concerns, recession fears and higher interest rates. This is happening 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 calmly in a hold following the share’s 12.5% ​​gain on Feb. 22. The shares remain within striking distance of a base’s 192.94 buy point. Bullish, the stock’s relative strength line is at new highs as the stock far outperforms market averages. PANW shares were up 0.1% on Monday.

Back story: On Feb. 21, the cybersecurity giant reported good results for the quarter ended January, when earnings were $1.05 per share, up 81% from a year earlier, on a 26% increase in revenue to $1. 7 billion.

The recent IBD stock of the day, New Relic, is working on a flat base with a buy point of 80.98 in the wake of the February 8 earnings-driven surge. The RS line will hold for the time being. Shares of NEWR fell 0.7% on Monday.

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

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

Tesla stock

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

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

Dow Jones leaders: Apple, Microsoft

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

Microsoft shares bullishly regained their 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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