What happened
After three recent bank failures in the U.S., Swiss regulators pushed UBS to buy Credit Suisse (CS) over the weekend. CS, whose stock had already fallen 80% over the past two years, even before the recent financial strains, was considered one of the weaker global links. A sharp increase in customer outflows last week increased the urgency of a deal.
Our take
The overall market has been fairly resilient over the past week, relative to the news flow and erratic swings. The S&P 500 bottomed just above the key support level at 3800 on Monday and actually gained 1.4% last week.
Much of the market’s resilience can be attributed to the strength in the technology and communications sectors, which gained more than 5% last week, alongside consumer discretionary, which rose 2%. These strong moves paired with positive returns in less economically-sensitive sectors, such as consumer staples, more than offset the 6% decline in the financials sector (11% decline in banks) and 7% decline in the energy sector.
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