Investors ease concerns after the acquisition of First Republic Bank

Following the acquisition of First Republic Bank (NYSE:FRC) from JPMorgan Chase & Co (NYSE:JPM) ahead of the Federal Reserve's interest rate decision this week and consistently reported quarterly results, recent US stock futures were slightly lower.

California regulators seized First Republic Bank on Monday before it was acquired by JPMorgan, marking the bank's third major failure in two months. JPMorgan shares rose 2% on Monday, while First Republic Bank shares plunged 43.3 percent prior to Monday's session.

First Republic was one of the regional lenders in the United States most impacted by the March banking confidence crisis. Many depositors withdrew more than $100 billion in the first quarter following the panic caused by the earlier failure of the other two US medium banks, causing the bank's shares to fall over the past week.

Following such an event, the path of US monetary policy is unclear. Most markets still expect the Fed to raise interest rates by 0.25 percentage point this week, despite continued high inflation, and may pause interest rate hikes at the June meeting, as the latest economic data shows a slowdown in economic activity and the banking sector's turmoil in March, which tightened lending.

The ISM Manufacturing PMI in the United States rose marginally in April to 47.1, exceeding estimates of 46.8 and the prior figure due to increased new orders and recovering employment. Meanwhile, non-residential construction spending increased more than expected in March, rising to +0.3% from -0.3% the previous month. While housing construction spending remains stagnant and borrowing rates rise, the risk of a recession this year is increasing.

However, energy stocks were a broad drag on the stock market, with the stocks in the S&P 500 index dropping 1.3% due to lower crude oil prices and the falling share price of Exxon Mobil Corp (NYSE:XOM) after Goldman Sachs lowered its oil forecast to "Neutral" from "Buy" earlier, pointing to the decline in energy company valuations during this period. While first-quarter results from companies in the S&P 500 index were largely above expectations, they helped to alleviate some economic concerns. As a result, the US stock market as a whole remains flat to declining throughout this period, awaiting the Fed's policy direction to be confirmed in the middle of this week.

Data for Technical Analysis (5H) CFD US 500 [S&P 500]

Resistance : 4176.5, 4182.0, 4191.1

Support : 4158.3, 4152.8, 4143.7           

5H Outlook

Source: Investing.com                              

Buy/Long 1 If the support at the price range 4153.3 - 4158.3 is touched, but the support at 4158.3 cannot be broken, the TP may be set around 4176.5 and the SL around 4150.0, or up to the risk appetite.

Buy/Long 2 If the resistance can be broken at the price range of 4176.5 - 4181.5, TP may be set around 4191.0 and SL around 4154.0, or up to the risk appetite.       

Sell/Short 1 If the resistance at the price range 4176.5 - 4181.5 is touched, but the resistance at 4176.5 cannot be broken, the TP may be set around 4152.4 and the SL around 4184.5, or up to the risk appetite.

Sell/Short 2 If the support can be broken at the price range of 4153.3 - 4158.3, TP may be set around 4143.0 and SL around 4181.0, or up to the risk appetite.       

Pivot Points May 02, 2023 03:21AM GMT

Sources: Investing 1, Investing 2