U.S. stocks head higher after JPMorgan's deal for First Republic

Investing.com -- U.S. stocks were rising after federal regulators seized First Republic Bank and sold its deposits and most of its assets to JPMorgan Chase.

At 10:59 ET (14:59 GMT), the Dow Jones Industrial Average was up 119 points or 0.4%, while the S&P 500 was up 0.3% and the NASDAQ Composite was up 0.2%.

The takeover of First Republic Bank could stabilize concerns about the banking system that have been percolating since two other bank failures in March, while investors are awaiting this week’s decision by the Federal Reserve. JPMorgan Chase&Co (NYSE:JPM) shares were up 3.1% in morning trading.

Futures traders still expect the Fed will raise rates by a quarter of a percentage point on Wednesday, and analysts will be listening for any future guidance from Chair Jerome Powell during his press conference that afternoon.

Where the Fed goes after Wednesday is a murkier question. Some expect it will pause on additional rate hikes at its June meeting as it evaluates the effects of its tightening so far. Recent economic data shows a slowing of activity, and the March banking turmoil is expected to tighten credit, which could further cool the economy.

On the other hand, manufacturing activity came in stronger for April. The ISM manufacturing PMI was 47.1, beating expectations for 46.8 and higher than the prior reading.

Earnings this week include reports from Apple Inc (NASDAQ:AAPL), Starbucks Corporation (NASDAQ:SBUX), and Uber Technologies Inc (NYSE:UBER) among others.

Expectations for the shape of earnings in the S&P 500 is improving as more companies report. Analysts now expect first-quarter earnings for the group to dip 1.9%. At the start of earnings reporting season, the expectation was that S&P 500 companies would see a 5.1% fall in earnings.

Shares of Norwegian Cruise Line Holdings Ltd (NYSE:NCLH) rose 6.7% after the cruise company raised its full-year outlook for profit, pinned to higher prices and forecasts for strong demand.