S&P 500 slips after recent bounce, banks in focus

© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 27, 2023. REUTERS/Brendan McDermid

By Shubham Batra and Amruta Khandekar

(Reuters) – The slipped on Tuesday after a three-day rally fueled by support measures for the banking sector and a deal for Silicon Valley Bank assets.

Bank shares rebounded sharply on Monday after First Citizens BancShares Inc said it would acquire the deposits and loans of Silicon Valley Bank, whose collapse earlier this month sparked a selloff in the sector.

Shares of First Citizens climbed 3.5% after surging more than 50% on Monday.

The KBW regional banking index slipped 0.1%, while the big U.S. banks including JP Morgan Chase (NYSE:) & Co, Bank of America (NYSE:) and Citigroup (NYSE:) were up marginally.

“The fact that we’ve got answers on Silicon Valley Bank, Signature Bank (NASDAQ:) and Credit Suisse means that we have more answers than questions,” said Art Hogan, chief market strategist at B Riley Wealth in Boston.

“But there are still enough unknowns that the market hasn’t really declared an all-clear signal yet.”

Lawmakers are expected to put U.S. bank regulators on the defensive over the unexpected failures of regional lenders Silicon Valley Bank and Signature Bank when they testify before Congress later on Tuesday.

Top regulatory officials for the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Treasury Department will testify before congressional committees.

Money market bets are now split between the Fed raising interest rates by 25 basis points and a pause in its policy meeting in May, after being largely tilted towards a no-hike scenario at the end of last week, according to CME’s Fedwatch tool. Investors expect a sharp easing in rates thereafter.

The Conference Board will release consumer confidence data later in the day, which is expected to show business conditions deteriorated marginally last month, making a case for a softer Fed policy stance.

The S&P 500 and Dow rose on Monday after the SVB deal was announced, while the closed lower, led by a decline in technology-related stocks.

Microsoft Corp (NASDAQ:), Alphabet (NASDAQ:) Inc, Apple Inc (NASDAQ:) and Tesla (NASDAQ:) Inc continued to remain under pressure, falling in the range of 0.6% and 2.5%.

At 9:43 a.m. ET, the was up 28.40 points, or 0.09%, at 32,460.48, the S&P 500 was down 8.01 points, or 0.20%, at 3,969.52, and the Nasdaq Composite was down 77.11 points, or 0.66%, at 11,691.73.

Alibaba (NYSE:) Group Holding jumped 7.2% after the firm said it plans to split its business into six main units covering e-commerce, media and the cloud.

Shares of Lyft Inc (NASDAQ:) were up 6.7% after the ride-hailing firm hired former Amazon.com (NASDAQ:) executive David Risher as its new chief.

Walgreens Boots Alliance (NASDAQ:) Inc added 2.6% after the U.S. pharmacy’s quarterly profit beat Wall Street expectations.

Advancing issues outnumbered decliners by a 1.26-to-1 ratio on the NYSE, while decliners outnumbered advancers by a 1.15-to-1 ratio on the Nasdaq.

The S&P index recorded five new 52-week highs and no new low, while the Nasdaq recorded 13 new highs and 40 new lows.