Stocks dip on mixed bank earnings 📉

Stocks returned to form on Thursday with modest gains for most indexes. The Dow ended the day close to flat, while the Nasdaq outperformed.

Dow [<0.1%]
S&P 500 [+0.7%]
Nasdaq [+1.6%]
Russell 2K [+0.7%]

Indexe futures are pointing lower in early premarket trading. S&P 500 contracts are down 0.2%.

Bank earnings kick off today with reports from JPMorgan, Citi, Wells Fargo, and others. The reports could hold sway over today’s session, and the market’s reaction to the numbers will most likely set the trading session.

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🕵️ Feds Investigate Morgan Stanley Wealth Management
Morgan Stanley [MS] faces probes from multiple federal regulators, including the Securities and Exchange Commission (SEC), the Office of the Comptroller of the Currency, and other Treasury Department entities.

This scrutiny is an expansion of earlier investigations reported by the Federal Reserve, which has already hinted at potential supervisory actions against the bank's wealth-management division.

Anti-Money Laundering 💵
The central concern of these investigations is Morgan Stanley's diligence in vetting new clients and monitoring ongoing financial activities, particularly regarding the origins of clients’ wealth and the potential for money laundering. The emphasis is notably sharp on the bank’s international clientele, raising questions about the robustness of its global compliance frameworks.

Company Response 🗯️
In response to the increasing regulatory pressure, Morgan Stanley has reportedly ramped up investments in compliance, technology, and artificial intelligence to enhance oversight of its wealth management transactions.

Despite these efforts, news of the broadened probe led to a sharp decline in Morgan Stanley's stock, which fell over 5% in recent trading sessions, reflecting investor concerns over the potential repercussions of these regulatory investigations.

Strategic Adjustments 🔧
The ongoing scrutiny from such a wide array of regulatory bodies signals a critical period for Morgan Stanley as it strives to align its operations with regulatory standards and restore confidence among stakeholders.

As the situation unfolds, the financial community and regulators alike will be closely monitoring Morgan Stanley's strategy to mitigate risks associated with its wealth management practices.

Zapata Computing [ZPTA] - Last Close: $2.50

A late Thursday Schedule 13G/A disclosure from Wolverine Asset Management revealed the fund had taken a position in Zapata Computing.

According to the filing, Wolverine’s position includes 76,789 shares of common stock, a minor position equaling less than a 0.1% ownership stake.

ZPTA is up 27.6% on more than 6.5 million shares traded in response to the news.

My Take: ZPTA is coming off a major pullback, but volume has begin to pick up in the past couple of days. It could be gearing up for a swing higher.

PaxMedica [PXMD] - Last Close: $0.4119

In yesterday’s aftermarket, this tiny biotech announced the achievement of a key milestone and the development of its PAX-101 drug candidate.

PaxMedica announced the completed execution of three pivotal registration batches of PAX-101, and it expects to submit a new drug application to the FDA in Q4 2024.

PXMD is a top gainer with a 148.1% gain on more than 16 million shares traded.

My Take: PXMD is getting a big boost from this news, but can it hold onto its gains? I imagine we’ll see a least a partial pullback before this move runs its course.

NextPlat [NXPL] - Last Close: $1.50

NextPlat posted record-beating revenues of $49.7 million on its full-year 2024 financial report in Thursday’s aftermarket, and shares are soaring in response.

The company’s full-year revenue figure marked a 22% increase from last year, and it improved its gross profit margin to 30% from 24% in 2022.

NXPL is up 64.9% on more than 15 million shares traded.

My Take: NXPL is making headway on sales, but a solid annual profit could still be a long way off.

Allarity Therapeutics [ALLR] - Last Close: $2.30

Micro-cap biotech Allarity Therapeutics filed a prospectus summary that increased the price of stock included in an upcoming offering.

Allarity said it has increased the price of offered shares from a max of $1.4 million to a max of $2.4 million.

ALLR is up 30.8% in the wake of the announcement, with 3 million shares traded in ahead of the opening bell.

My Take: ALLR is offering shares at a price of $8.56 per share, which is a big premium over its current price. Maybe the '‘Smart Money” knows something we dont.

Gainers
Beneficient [BENF] >> +71.4%
AMTD Digital [HKD] >> +24.2%
Trio Petroleum [TPET] >> +24.1%
Decliners
Motus GI [MOTS] >> (37.4%)
Monogram Ortho [MGRM] >> (18.6%)
Rallybio [RLYB] >> (15.4%)

JP Morgan Chase [JPM] ... AM
Wells Fargo [WFC] ... AM
Blackrock [BLK] ... AM
Citigroup [C] ... AM
State Street [STT] ... AM
Bank7 [BSVN] ... AM
Oncocyte [OCX] ... AM
KULR Technology Group [KULR] ... PM

Import price index [Mar] ... 8:30a
Consumer sentiment (prelim) [Apr] ... 10:00a