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Today in the Market (3/27/2023)

Good Evening! Monday was a mixed day for U.S. markets, with bank stocks rising after North Carolina’s First Citizens (FCNCA) bank agreed to acquire the majority of Silicon Valley Bank.

The S&P 500 closed 0.16% higher, while the Dow Jones rose 0.60%. However, the Nasdaq Composite declined by 0.47%.

ANOTHER DAY, ANOTHER 7,000 EMPLOYEE LAYOFF

Disney (DIS) CEO Bob Iger announced the start of the business’s mass layoffs on Monday, a month after the company disclosed intentions to lay off 7,000 employees to reduce expenses by $5.5 billion.

Being at the bottom of the barrel… In an internal message acquired by Yahoo Finance, Iger said, “This week, we begin notifying employees whose positions are impacted by the company’s workforce reductions… Leaders will be communicating the news directly to the first group of impacted employees over the next four days. A second, larger round of notifications will happen in April with several thousand more staff reductions.”

More is in the works. In addition to the February layoffs, Disney revealed intentions to reorganize the company into three primary business segments: Disney Entertainment, ESPN, Disney Parks, Experiences, and Products.

MORE BANKINGS NEWS!

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These are strange times… The purchase of Silicon Valley Bank by First Citizens BancShares Inc. included an unusual provision: a $70 billion line of credit from the Federal Deposit Insurance Corporation. This line of credit will accrue an interest equivalent to the Secured Overnight Financing Rate + 25 basis points for a period of five years.

Why is the government providing aid? The loan is intended to assist First Citizens to address liquidity demands that develop over the next two years as it incorporates SVB into its operations, according to a regulatory filing from the Raleigh, North Carolina-based lender.

There are no free lunches, however… The FDIC receives a portion of these profits. As part of the agreement, the agency obtained stock interests in First Citizens valued up to $500 million as of Monday morning. In addition, First Citizens issued a $35 billion note as payment for the transaction. But, First Citizens did jump 52%, the biggest in over 30 years, on the announcement of its purchase.

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