The major averages are weaker at midday after Credit Suisse and Nomura announced on Monday that they could be hit with sizable losses from dealings with a U.S. hedge fund client that had to liquidate. The news has weighed on shares of other global banks amid reports that Archegos Capital Management, the family office of Bill Hwang, was the source of block trades selling Chinese tech giants and U.S. media firms on Friday.
ECONOMIC EVENTS: In the U.S., the Dallas Fed's March manufacturing index surged 11.7 points to 28.9, which was much better than expected.
TOP NEWS: Shares of Boeing (BA) are 2% higher near noon after the company and Southwest Airlines (LUV) announced the carrier will "continue to build its business around the 737 MAX family" with a new order for 100 airplanes and 155 options across two models. Given the new deal, Boeing and its suppliers "could build more than 600 new 737 MAX jets for the airline through 2031," the companies stated.
In banks news, Credit Suisse (CS) said in a statement that a "significant US-based hedge fund defaulted on margin calls made last week by Credit Suisse and certain other banks," following which Credit Suisse "and a number of other banks are in the process of exiting these positions." Credit Suisse added: "While at this time it is premature to quantify the exact size of the loss resulting from this exit, it could be highly significant and material to our first quarter results, notwithstanding the positive trends announced in our trading statement earlier this month." Meanwhile, Nomura (NMR) announced that on March 26 "an event occurred that could subject one of its US subsidiaries to a significant loss arising from transactions with a US client." Nomura said it is currently evaluating the extent of the possible loss and the impact it could have on its consolidated financial results, estimating the amount of the claim against the client is "approximately $2 billion based on market prices as of March 26," but adding that this estimate is "subject to change." Both of the banks' warnings may be related to the reported liquidation of positions at Bill Hwang's Archegos Capital Management.
In COVID-19 news, the CDC released a study that details following 3,950 health care personnel, first responders, and other essential and frontline workers who completed weekly SARS-CoV-2 testing for 13 consecutive weeks. The study found that "under real-world conditions" messenger RNA, or mRNA, vaccines from Moderna (MRNA) as well as Pfizer (PFE) and BioNTech (BNTX) showed effectiveness of "full immunization" was 90% against SARS-CoV-2 infections regardless of symptom status. The vaccine effectiveness of partial immunization, meaning greater than or equal to 14 days after first dose but before second dose, was 80%, the report added.
MAJOR MOVERS: Among the noteworthy gainers was Humanigen (HGEN), which rose 91% after announcing that its anti-GM-CSF antibody lenzilumab has demonstrated a 54% greater relative likelihood of survival without the need for invasive mechanical ventilation in combination with standard-of-care compared to SoC alone in hospitalized hypoxic COVID-19 pneumonia patients in a Phase 3 study.
Also higher was Fly Leasing (FLY), which gained 27% after the company agreed to be acquired by an affiliate of Carlyle Aviation Partners, the commercial aviation investment and servicing arm within The Carlyle Group's (CG) Global Credit platform.
Among the notable losers was Celldex Therapeutics (CLDX), which dropped 34% after the company reported interim data from its ongoing, open label clinical trial of CDX-0159 in patients with antihistamine refractory cold contact urticaria and symptomatic dermographism.
Also lower was Orphazyme (ORPH), which fell 27% after the company announced its phase 2/3 trial evaluating arimoclomol for the treatment of a progressively debilitating muscle-wasting disease known as "IBM" did not meet its primary and secondary endpoints.
INDEXES: Near midday, the Dow was down 49.49, or 0.15%, to 33,023.39, the Nasdaq was down 95.76, or 0.73%, to 13,042.97, and the S&P 500 was down 12.30, or 0.31%, to 3,962.24.
Boeing
+6.35 (+2.59%)
Southwest
-0.84 (-1.37%)
Credit Suisse
-1.47 (-11.43%)
Nomura
-0.885 (-13.37%)
Pfizer
+0.34 (+0.94%)
Moderna
-9.05 (-6.80%)
BioNTech
-0.92 (-0.96%)
Humanigen
+12.69 (+90.58%)
Fly Leasing
+3.615 (+27.30%)
Carlyle
-0.25 (-0.68%)
Celldex
-8.46 (-35.24%)
Orphazyme
-3.6 (-29.06%)