S&P, Dow, Nasdaq futures drift as J.P. Morgan swoops in to rescue First Republic

Stock index futures were little changed Monday as investors enter the sell-in-May-and-go-away period.

S&P futures (SPX), Nasdaq 100 futures (NDX:IND) and Dow futures (INDU) each moved less than 0.1%.

Markets in Europe were closed for the May 1 (Labor Day) holiday.

Focus was on regional banks as FDIC took struggling First Republic into receivership, with JPMorgan Chase (JPM) ready to take control of deposits. FRC plunged to just above $2, while JPM rose nearly 3%.

But big moves may be unlikely with the Fed decision coming Wednesday. Fed funds futures price in an 85% chance of a quarter-point hike, with cuts still expected by the end of the year.

The 10-year Treasury yield (US10Y) rose 2 basis points to 3.47%. The 2-year yield (US2Y) was flat at 4.07%.

“Markets and policy makers believe that little progress is being made on inflation,” Standard Chartered strategist Steve Englander wrote. “Fed commentary emphasizes that ‘there is more work to do’ to get inflation down to acceptable levels. We think the data present a more sanguine picture on the evolution of inflation.”

“Before March PCE inflation data were released we argued that the case for the Fed delaying a hike was compelling,” he said. “Contrary to the market view, we think the March PCE data reinforce that case. Core PCE ex-shelter inflation is falling steadily. The 12-month pace is under 4%, the 6-month pace is under 3% and the latest March m/m reading annualizes to under 2%.”

After the start of trading, the April ISM manufacturing index arrives. Economists predict a slight rise to 46.8, still in contraction territory.

March construction spending hits at the same time. The forecast is for a 0.1% monthly rise.

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