How Regional Banks Could Impact the Market Next Week: An Analytical Review

Regional bank stocks may not be a major focus for investors in the upcoming week, despite the recent losses experienced by First Republic and the SPDR S&P Regional Banking ETF. Even if the stocks continue to sell, it is expected that bank lending officers will become more risk averse and credit will be harder to come by. The National Federation of Independent Business report for April will be monitored to see whether small business owners are having difficulty securing loans. Janet Yellen’s latest letter to Congress indicates that the Treasury may breach the debt limit in less than four weeks. This combined with tighter bank lending conditions could lead to higher unemployment and recessionary risks, according to Goldman Sachs’ chief global equity strategist. With fewer companies reporting earnings next week, attention will turn to the April consumer price index and whether there are signs of inflation moderating. Although stocks are facing a range of issues, the Cboe Volatility Index is low and money market funds have attracted more than $50 billion in the most recent week. The week ahead will be busy with a range of economic data releases and earnings reports.