A weekend absent any disruptive bank headlines helped stocks open higher Monday.
The one bit of financial sector news that hit the wires – specifically, that First Citizens BancShares (FCNCA) is buying a large amount of assets from failed Silicon Valley Bank – only served to calm investors' fears. Still, only two of the three major indexes managed to hold their gains through the close.
Over the weekend, First Citizens agreed to buy Silicon Valley Bridge Bank's deposits and loans from the FDIC. The North Carolina-based lender will also take control of 17 former SVB branches. FCNCA stock jumped 53.7% on the news, lifting fellow regional bank stocks, including First Republic (FRC, +12.0%) and Western Alliance (WAL, +3.0%).
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The positive start for markets comes as "last Friday's Deutsche Bank (DB) scare ended without ferreting out a viable catalyst that caused the insurance on its bonds, a credit default swap (CDS), to rise dramatically in price," says Quincy Krosby, chief global strategist for LPL Financial. "That shares of First Citizens Bank are climbing higher on the news is significant in that it's the market's confirmation that the deal holds value for First Citizens."
Krosby adds that the financial sector will remain in focus this week, with congressional hearings over the bank crisis scheduled on Capitol Hill. Also on deck are several Federal Reserve speeches and Friday's release of the Fed's preferred inflation gauge, the personal consumption expenditures index.
"In a market that's become more concerned about an impending recession, a cooler inflation print could ease the Treasury market's fears while giving equity markets a cause for celebration," Krosby says.
For today, the Dow Jones Industrial Average rose 0.6% to 32,432 and the S&P 500 gained 0.2% to 3,977. The Nasdaq Composite, on the other hand, slipped 0.5% to 11,768 amid weakness in mega-cap tech stocks such as Apple (AAPL, -1.2%) and Alphabet (GOOGL, -2.8%).
Today's upbeat bank headlines also sent U.S. crude futures soaring 5.1% to $72.81 per barrel – their highest settlement since March 13. "It's been a volatile few weeks for crude, caught up in the banking storm as investors are forced to scale back their expectations for the economy which, in turn, has weighed heavily on demand prospects," says Craig Erlam, senior market analyst at currency data provider OANDA. "But with sentiment slowly improving and yields inching cautiously higher, so too are oil prices."
Why investors should consider international stocks
Investors seeking out the best stocks to buy may want to start looking beyond the U.S. border to find attractive opportunities. "A lot of last year's headaches – higher inflation and rising interest rates – should subside throughout this year," says Nicole Kornitzer, manager of Buffalo International, "so the big question is how much of those rate hikes will flow through and cause a recession." And some experts believe key markets like Europe could have a shallower-than-anticipated recession, if one occurs at all. Additionally, global markets boast plenty of value stocks at the moment.
As with any investment, it's best to do some research before diving in. To help, Kiplinger has developed a jumping off point for investors wanting to find the best international stocks, as well as top mutual funds and exchange-traded funds for foreign markets.
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