Investing

Before the Bell: Regional Banks Recover, Icahn Moves on Illumina, Plus Gold and Bitcoin

Paul Ausick

Published: March 14, 2023 7:34 am

Last Updated: March 14, 2023 7:35 am

Premarket action on Tuesday had the three major U.S. indexes trading higher. The Dow Jones industrials were up 0.35%, the S&P 500 up 0.47% and the Nasdaq 0.45% higher.

Seven of 11 market sectors closed higher on Tuesday. Real estate (1.61%) and utilities (1.54%) added the most. Financials (−3.78%) and energy (−1.96%) posted the day’s worst losses. The Dow closed up 0.4%, the S&P 500 up 0.39% and the Nasdaq up 0.3%.

Two-year Treasuries dropped 57 basis points to 4.03% on Friday, and 10-year notes fell by 15 basis points to close at 3.55%. In Tuesday’s premarket, two-year notes traded near 4.23% and 10-year notes at about 3.62%.

Monday’s trading volume was sharply above the five-day average. New York Stock Exchange losers outpaced winners by 2,237 to 839, while Nasdaq decliners led advancers by about 7 to 4.

Premarket trading Monday morning set the tone for the regular season action. First Republic Bank (NYSE: FRC), Western Alliance Bancorporation (NYSE: WAL) and PacWest Bancorp (NASDAQ: PACW) were off by 70%, 70% and 43%, respectively, early on and closed the day down 62%, 45% and 28%, respectively. No S&P 500 regional bank closed in the green.

Tuesday morning was a somewhat different story. First Republic, which received more cash from both the Federal Reserve and JPMorgan on Monday, traded up about 20% in Tuesday’s premarket session. Western Alliance traded up 21%, and PacWest was up 30%.

Zions Bancorp. (NASDAQ: ZION) dropped nearly 26% on Monday and traded up by more than 11% Tuesday morning. Comerica Inc. (NYSE: CMA), which fell by 28% Monday, traded up nearly 10% early Tuesday.

Moody’s has placed all five (First Republic, Western Alliance, PacWest, Zions and Comerica) on review for downgrade on all long-term ratings and assessments.

Illumina Inc. (NASDAQ: ILMN) added almost 17% to its share price on Monday, after The Wall Street Journal reported that activist investor Carl Icahn plans to nominate three people for the biotech company’s board of directors. Icahn claims that Illumina has lost $50 billion in valuation since completing the company’s $7.1 billion acquisition of cancer-screening company Grail in the fall of 2021. Icahn’s letter to Illumina shareholders focuses on that company’s sale of Grail for around $2 billion before buying it back a few years later.

Before markets open on Tuesday, the Bureau of Labor Statistics will release consumer price index (CPI) data for February. The consensus estimate calls for a rise of 0.4% month over month, down from the 0.5% rise in January. Core CPI (excluding energy and food) is forecast to rise 0.5%, slightly more than the January increase of 0.4%.

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Wednesday brings the February reports on the producer price index (PPI) and retail sales data.

Gold prices rose more than 2% on Monday to a high of around $1,919 per ounce. That sent shares of Newmont Corp. (NYSE: NEM) up 7% on the day. Gold was trading down about 0.5% Tuesday morning, and Newmont traded down about 0.7%. Bitcoin rose 12.7% Monday and traded up about 2% in Tuesday’s premarket at $24,647.