US stocks close lower after First Republic falls and ahead of the Fed’s 2-day policy meeting

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US stocks fell on Monday after First Republic Bank collapsed on the first trading day of May.  JPMorgan bought the bulk of the California lender’s assets in a $10.6 billion deal.  The third bank failure this year comes as the Fed is expected to raise interest rates for the 10th consecutive time.  Loading Something is loading.

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US stocks lost ground Monday after investors spent the first day of May trading gauging the implications of First Republic Bank’s seizure, with the second-largest bank failure in US history arriving just before the Federal Reserve is expected to raise interest rates again. 

The S&P 500 Financial sector slipped, contributing to pulling down the S&P 500 index after two straight winning sessions that capped off an advance for April. 

JPMorgan shares, however, led the Dow Jones Industrial Average after the bank took over the bulk of First Republic’s assets in a $10.6 billion deal. JPMorgan will pull in $92 billion in deposits from First Republic after numerous clients yanked $100 billion from the California lender in the first quarter.

The moves followed the abrupt March collapses and seizures of Silicon Valley Bank and Signature Bank. First Republic Bank shares were halted during the session after tumbling sharply. 

Investors will want to hear what Fed Chair Jerome Powell will say about the newest bank failure when the US central bank delivers its May policy decisionn on Wednesday. Markets were largely pricing in a 10th straight rate hike.

Here’s where US indexes stood at the 4:00 p.m. closing bell on Monday: 

 S&P 500: 4,167.87, down 0.04%Dow Jones Industrial Average: 34,051.70, down 0.14% (46.46 points) Nasdaq Composite: 12,212.60, down 0.11%Some may view last month’s deposit infusion into First Republic by large rivals as a failure, but CFRA said it disagreed.

“If FRC had not received $30 billion from large banks in mid-March, the bank would likely have failed sooner, resulting in more fear and more deposit withdrawals from other regional banks. This could have caused a series of bank failures that would have weakened the U.S. financial system,” CFRA equity analyst Alexander Yokum said in a note. 

Here’s what else is happening today:

Here’s what investors are looking for from the Fed’s May meeting. Elon Musk says dead banks prove more rate hikes will cause a severe recession.Stocks look set to sell off as an overly hawkish Fed could hurt expectations for interest rate cuts, says Morgan Stanley’s top strategist.Warren Buffett’s right-hand man Charlie Munger warns of turmoil in the US commercial property market.Most investors expect Buffett’s Berkshire Hathaway to outperform the S&P 500 over the next five years.A new “ex-China world order” will keep inflation higher, venture capitalist Chamath Palihapitiya says.More than half of investors expect shares of Warren Buffett’s Berkshire Hathaway to outperform the S&P 500 Index over the next five years.From a credit crunch to a meltdown in the commercial real estate market, here’s what top economists are predicting for the coming months.In commodities, bonds, and crypto:

West Texas Intermediate crude dropped 1.3% to $75.78 per barrel. Brent crude, the international benchmark, fell 1.1% to $79.45.  Gold lost 0.5% to $1,989.50 per ounce. The 10-year Treasury yield shot up 13 basis points to 3.56%.Bitcoin gave up 4.1% at $28,036.50.


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