U.S. equities begin the week on a slightly higher note, as investors digest the U..S regulator's approval of the sale of First Republic Bank (NYSE:FRC)'s assets to JPMorgan Chase & Co. (NYSE:JPM). 

Both the S&P 500 and the Dow Jones Industrial Average are slightly stronger, while the Nasdaq remained steady due to rising Treasury yields. 

The main underperformers of the day are U.S. Treasuries, with yields jumping dramatically across all maturities of the curve as investors perceive First Republic's resolution as lowering the risks of a banking meltdown. 

Cues From Monday’s Trading:

Major U.S. equity indices edged higher, with both the S&P 500 and the Dow adding 0.3%, while the Nasdaq 100 was flat. 
Small cap equities in the Russell 2000 were the outperformers, with the benchmark rising 0.5%. 

Analyst Color:

The last week’s rally was driven by larger companies as investors sought refuge in quality names amid the credit concerns brewing in the banking industry, which would be more of a problem for smaller businesses, said fund manager Louis Navellier. He noted that the Invesco QQQ Trust (NASDAQ:QQQ) hit the high for the year on the back of positive big tech earnings.

“If the Fed doesn't say they are done for now after next Wednesday's FOMC meeting, the market indexes appear vulnerable,” Navellier said.

Among sectors, the outperformers were the Utilities Select Sector SPDR Fund (NYSE:XLU) and the Industrials Select Sector SPDR Fund (NYSE:XLI), both up by 0.9%.  

Latest Economic Data:

• The Institute for Supply Management said the U.S. manufacturing purchasing managers’ index, or PMI, rose from 46.3 in March to 47.1 in April, beating expectations of 46.8. Among the different subindices, it's worth noting that input costs increased in April after falling somewhat the previous month.

The Commerce Department reported a 0.3% increase in construction spending in March, rising from the negative 0.3% recorded in February. 

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Stocks In Focus:

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 1.8%, with a barrel of WTI-grade crude dropping to $75.20. The United States Oil Fund ETF (NYSE:USO) was 1.8% lower to $66.30 per share.  

Treasury yields rose substantially, with the 10-year yield up by 13 basis points to 3.55% and the two-year yield also up 13 basis points to 4.13%. The iShares 20+ Year Treasury Bond ETF (NYSE:TLT) was 2.4% lower on the day. 

European equity were mostly flat. The iShares MSCI Eurozone ETF (NYSE:EZU) tilted 0.2% higher. 

Staff writer Piero Cingari updated this report midday Monday. 

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