Premarket action on Monday had the three major U.S. indexes trading essentially flat. The Dow Jones industrials were trading up 0.01%, the S&P 500 was down 0.01% and the Nasdaq was 0.05% lower.

Nine of 11 market sectors closed higher on Friday. Energy (1.47%) and financials (1.19%) posted the day’s best gains. Utilities (−0.19%) and consumer cyclicals (−0.04%) lagged. The Dow closed up 0.8%, the S&P 500 up 0.83% and the Nasdaq up 0.69% on Friday.

Two-year Treasuries dropped three basis points to end Friday at 4.04%, and 10-year notes fell by nine  basis points to close at 3.44%. In Monday’s premarket, two-year notes were trading at around 4.06% and 10-year notes at about 3.46%.

Friday’s trading volume was above the five-day average. New York Stock Exchange winners outpaced losers by 2,206 to 798, while Nasdaq advancers led decliners by about 2 to 1.

Before U.S. markets open on Monday, 11 companies are scheduled to report quarterly results. Fifty-eight firms will release earnings reports after markets close.

The Federal Reserve’s open market committee (FOMC) meeting begins Tuesday and ends Wednesday with a press conference when the Fed announces whether the federal funds rate will change. The current range of 4.75% to 5.00% is expected to rise by a quarter point to a range of 5.00% to 5.25%. On Friday, the Bureau of Labor Statistics will release its employment situation report for April. Nonfarm payrolls are currently forecast to rise at a slower pace than the March increase, and the headline unemployment rate is expected to increase from 3.5% to 3.6%.

Thursday’s advance report on first-quarter gross domestic product looked awful when it hit the tape. However, the big miss on growth (forecast at 2.0%, actually up just 1.1%) was due almost entirely to inventory declines. Personal spending rose 3.7%, way above the prior quarter’s 1% gain. Excluding the inventory changes, real final sales rose from 1.1% in the fourth quarter of 2022 to 3.4% in the first quarter.

New claims for unemployment benefits declined by 16,000 to 230,000, well below the consensus estimate for 245,000 new claims. Continuing claims dropped by 3,000 to 1.858 million.

Friday’s big gainer among the S&P 500 stocks was Charter Communications Inc. (NASDAQ: CHTR). The cable and broadband service provider missed the consensus estimate for earnings per share and exceeded the revenue estimate. Capital spending for the quarter totaled $2.5 billion, up about 31.6% year over year. The company said it spent $890 million on line extensions that include a subsidized rural construction build-out and further expansion in its existing markets.

Last week, First Republic Bank (NYSE: FRC) lost 70% of its value, and since the bank debacle began in early March, the shares dropped 97%. The bank’s stock lost more than 43% on Friday and ceased to exist Monday morning after state regulators closed the bank and the FDIC was appointed the receiver.

The federal agency then entered a purchase and assumption agreement with JPMorgan Chase & Co. (NYSE: JPM) to assume First Republic’s deposits and to purchase “substantially all” of the failed bank’s assets. First Republic’s 84 branch offices will open as scheduled Monday morning as branches of JPMorgan, and all depositors will become JPMorgan depositors and “will have full access to all of their deposits.”

While JPMorgan, the country’s largest bank, is ordinarily barred from acquiring other banks because it already controls more than 10% of U.S. deposits, the cap was waived in this instance. The bank has estimated that its acquisition of First Republic would add about $500 million to its annual profit. JPMorgan has reported net income of more than $42 billion over the past four quarters.

JPMorgan CEO Jamie Dimon commented, “This acquisition modestly benefits our company overall, it is accretive to shareholders, it helps further advance our wealth strategy, and it is complementary to our existing franchise.” The big bank is not acquiring First Republic’s preferred stock nor its corporate debt.

The FDIC estimates the final cost to the agency’s deposit insurance fund will be about $13 billion.

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Were it not for First Republic’s failure (the second largest bank failure in U.S. history), Monday morning’s business news would be led by the announcement of U.K. chipmakers Arm’s confidential filing with the U.S. Securities and Exchange Commission for a proposed initial public offering of American depositary shares. The size and pricing of the offering have not been determined yet.

In July of 2020, Nvidia Corp. (NASDAQ: NVDA) offered to buy Arm from Masasashi Son’s Softbank in a cash and stock deal valued at around $40 billion. The deal was scuppered when rival chipmakers, like Qualcomm Corp. (NASDAQ: QCOM), opposed the deal and regulators indicated that the sale to Nvidia would not be approved. In February of 2022, Arm and Nvidia announced that the acquisition was off.

Softbank acquired Arm (an acronym for Advanced RISC Machine, and RISC is an acronym for reduced instruction set computing) in 2016 for $32 billion. While Arm’s technology is at the heart of Apple Inc.’s (NASDAQ: AAPL) iPhone, Apple’s own CPUs, and literally thousands of other chips and devices, Arm does not fabricate semiconductors. It designs the circuitry for a chip and then licenses the designs to third parties. The company was founded in 1983, and Ars Technica had an article last year summarizing the company’s technology and history.

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