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By Yoruk Bahceli

(Reuters) – Inflation and the U.S. presidential election will be the biggest drivers of global markets this year, while liquidity challenges are a growing focus, according to traders surveyed by JPMorgan.

Some 27% of traders see inflation as having the biggest impact, followed by 20% for the November election, the survey published on Tuesday showed.

Bonds and equities rallied late last year on hopes that slowing inflation would prompt hefty central bank rate cuts this year. But those bets have been scaled back, with Friday’s blowout U.S. jobs data prompting the biggest sell-off in U.S Treasuries since September.

Markets are bracing for further volatility as the U.S. presidential election looms, with former president Donald Trump’s victory in the New Hampshire Republican primary bringing him closer to a rematch with Democrat President Joe Biden.

JPMorgan’s Global Head of Digital Markets Eddie Wen said greater focus this year on macro and risk events may create short-term volatility, with particular focus on the release of U.S. monthly jobs and inflation numbers.

Recession fears, which topped last year’s survey, fell to third place at 18% as economic growth beats expectations, the survey said.

War in Europe, where Russia’s invasion of Ukraine heads into its third year, and the Middle East, where the Hamas-Israel conflict is watched for signs of escalation, followed at 14%.

Traders expected volatile markets to remain their top trading challenge, but the share of respondents putting it in first place dropped 18 percentage points from last year to 28%.

Liquidity availability neared the top of the list of trading challenges at 24%, up from 22% last year, while access to liquidity remained traders’ biggest market structure concern.

Chi Nzelu, global head of macro e-Trading at JPMorgan, said as electronic trading grows in prominence, having consistent access to liquidity across a breadth of providers was becoming more important to investors.

“They want to know that it will continue to be reliable even in shock times, which has broadly been the case across different markets in recent years,” he said.

Traders in credit markets and cash equities named liquidity availability as their top challenge.

“The market structure within the credit markets is becoming more complicated,” said Wen.

“There are more trading platforms to support trading of corporate bonds alongside the emergence of portfolio trading, bloc trading, larger trades, all now becoming more electronic over time.”

This meant selecting the best way to execute trades was becoming a key question for investors, he said.

(Reporting by Yoruk Bahceli; editing by Dhara Ranasinghe and)

By Arriana McLymore and Greg Bensinger

(Reuters) – Amazon.com has begun rolling out a new artificial intelligence assistant that is meant to address shoppers’ product questions, but the feature raises as many questions as it answers.

Rufus, as the software is known, will help users, according to Amazon, by guiding them to the toaster ovens or dinosaur toys that best fit their needs. Yet Amazon has a history of steering customers towards products that most benefit Amazon, either because they are more profitable or are backed by advertising dollars, according to the Federal Trade Commission’s pending 2023 antitrust lawsuit against Amazon.

The FTC accused Amazon of “biasing Amazon’s search results to preference Amazon’s own products over ones that Amazon knows are of better quality.” Further, the FTC alleges the Seattle firm operates a “pay-to-play” system, giving top billing for the products on which marketers were willing to spend the most. The company has denied the claims and said it will contest the suit in court.

Amazon’s general counsel said in 2023 that the FTC “is wrong on the facts and the law,” and that its practices “have helped to spur competition and innovation across the retail industry.”

Like for other generative AI services, the algorithm behind Rufus is a closely held secret and Amazon declined to discuss how it operates. It offered some clues, including a press release, that said it is trained using Amazon’s product catalog, reviews, information from the web and question and answer sections.

But Michael Pachter, a Wedbush Securities analyst, said Amazon would be turning money away if it didn’t ostensibly open Rufus’ results up to advertisers. “You’ll most likely get sponsored results,” he said. “Advertising drives retail and Amazon is no different – why do you think they are generating tens of billions of dollars in advertising a year?”

The company on Thursday reported a 27% jump in ad sales in last year’s fourth quarter to $14.7 billion.

At least initially, Rufus doesn’t appear to be influenced by advertising. Gil Luria, a D.A. Davidson senior software analyst, said that was likely necessary to build trust with consumers. “If they lose your faith in how they answer, you’re not going to ask them anymore,” Luria said.

ADVERTISING AND CONSUMER CHOICES

Yet the company has time and again allowed advertising to creep into its recommendations.

Consumers may have once believed that an “Amazon’s Choice” designation indicated a review or testing process, but Amazon once granted that badge to marketers who were willing to pay for it, according to a 2019 Digiday story citing an Amazon internal deck from 2017.

Amazon has denied that the company has ever allowed sponsored results in “Amazon’s Choice” and said the label relies primarily on criteria such as reviews, shipping speed and price, according to a company spokesperson.

Europe’s top antitrust enforcer Margrethe Vestager said Amazon’s ability to limit access to the “Amazon’s Choice” badge was one reason for her objection to the company’s planned takeover of Roomba-maker iRobot. Amazon walked away from the deal last month.

And Amazon previously allowed marketers to place products in customers’ online baby registries without their knowledge, a Wall Street Journal investigation found. It has since ended the practice.

Amazon.com search results included nine sponsored listings on average, a study by Profitero from 2020 to 2021 found, twice the amount as Walmart and four times that of Target.

Jim Tierney, Chief Investment Officer of Concentrated US Growth Equities at AllianceBernstein, said he saw real promise in Rufus “if you actually have some kind of an AI conversational shopper.”

“That just means more engagement and more conversion, which means more revenues and more units (sold),” Tierney said.

But Amazon offered few clues in rolling out Rufus to select customers. In a call with investors, CEO Andy Jassy said Rufus “lets customers discover items in a very different way than they have been able to on e-commerce websites.”

Amazon in a blog post showed how the software might respond to a query about a particular pickleball paddle’s worthiness for beginners. “This paddle is a great option for beginners,” the software replied, according to a screenshot. “The large sweet spot helps beginner players get the ball over the net consistently.” In another example it displayed Tyrannosaurus Rex toys for a query about best toys for a “dinosaur obsessed 5-year old.”

The company said Rufus is trained using Amazon’s product catalog, reviews, information from the web, and question and answer sections.

However Rufus evolves, Luria said Amazon has an edge over Google and Microsoft’s AI applications because it has a rich trove of purchasing and personalized data that’s quite an advantage at the checkout counter.

(Reporting by Arriana McLymore in New York and Greg Bensinger in San Francisco; Editing by Nick Zieminski and Lisa Shumaker)

By Samrhitha A, Aishwarya Venugopal and Chuck Mikolajczak

(Reuters) -Meta Platforms added $196 billion in stock market value on Friday, marking the biggest one-day gain by any company in Wall Street history after the Facebook parent declared its first dividend and posted robust results.

Meta’s stock surged 20.3% for the session, also recording its biggest one-day percentage increase in a year and its third biggest since its 2012 Wall Street debut. Its stock market value now stands at more than $1.22 trillion.

Days ahead of Facebook’s 20th anniversary, Meta late on Thursday authorized an additional $50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.

While dividends are associated with mature, slow-growth companies, Meta’s is the fourth offered by Wall Street’s most valuable technology-related heavyweights, along with Apple, Microsoft and Nvidia.

“Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount being paid is only a token gesture,” said Dan Coatsworth, an investment analyst at AJ Bell.

Friday’s increase in Meta’s market capitalization eclipsed the previous record held by Amazon, which saw its market value surge by $190 billion on Feb. 4, 2022 following a blowout quarterly report. One day before, Meta lost over $200 billion in value, the biggest loss in U.S. stock market history, after it issued a dismal forecast.

Meta’s dividend plan means a hefty payout for CEO Mark Zuckerberg, who owns about 350 million Meta Class A and Class B shares. The Facebook co-founder could get about $175 million every quarter.

Optimism about the potential for artificial intelligence contributed to a 24% rally in the S&P 500 last year, with Meta, Nvidia, Microsoft and Broadcom recently hitting record highs. With Friday’s gain, Meta is now up 35% in 2024.

The world’s biggest social media company flagged strong ad sales and a rebound in user growth during its fourth-quarter results that saw its revenue surge 25%. Its forecast for current-quarter revenue also exceeded analysts’ estimates.

Surging revenue, combined with an 8% drop in costs and expenses after eliminating more than 21,000 jobs since late 2022, allowed Meta to triple its net income to $14.02 billion.

“The ‘Year of Efficiency’ has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue,” said Jasmine Enberg, principal analyst at Insider Intelligence.

While Meta’s dividend is small compared to many companies, it could make its stock more attractive to a broader swathe of investors, including exchange-traded funds focused on stocks that pay dividends.

Meta’s dividend yield is about 0.4% following Friday’s stock rally. By comparison, Apple’s dividend yield is about 0.5%, while Microsoft’s is 0.7% and Nvidia’s is under 0.1%, according to LSEG.

“This can start attracting investors who really do look for dividends and more steady income,” said Brian Jacobsen, Chief Economist at Annex Wealth Management.

Exchange Traded Funds (ETFs) that are focused on U.S. dividend payers have assets of over $400 billion, accounting for just over 5% of the entire domestic ETF universe, according to data from Morningstar Direct.

Meta has been spending billions of dollars over the past decade to boost its computing capacity for generative AI products it is adding to Facebook, Instagram and WhatsApp, and to hardware devices such as its Ray-Ban smart glasses.

(Reporting by Aishwarya Venugopal and Samrhitha Arunasalam in Bengaluru; Additional reporting by Medha Singh, Akash Sriram and Yuvraj Malik; Writing and additional reporting by Noel Randewich in Oakland, Calif.; Editing by Alden Bentley, Shounak Dasgupta, David Gregorio, Kirsten Donovan and Deepa Babington)

By Trevor Hunnicutt

WASHINGTON (Reuters) – U.S. President Joe Biden’s administration is taking aim at grocery chains, sending an election-year suggestion that the companies lower prices on goods from milk to eggs and bread.

“Our message is a very clear one that the president has and will continue to lean into, which is, if you’re a company whose input prices have come down and you’re not passing those savings along to the consumer, he will call you out,” said Jared Bernstein, the chair of Biden’s Council of Economic Advisers, in a virtual meeting with reporters.

“We’ve seen elevated (profit) margins, particularly in the grocery sector, and have taken note that there needs to be more pass-through there (to consumers).”

Bernstein did not name any specific companies.

Grocery giants Walmart, Kroger and Albertsons are booking 20-plus percent gross profit margins, roughly in line with where they were before the COVID-19 pandemic spiked inflation.

A White House analysis of Census data shows food-and-beverage retailers’ revenues as a share of their costs have risen sharply from before the pandemic to a level not seen since the mid-2000s, a measure that they say more directly tracks retail mark-ups.

Last week, Biden said “there are still too many corporations in America ripping people off: price gouging, junk fees, greedflation, shrinkflation.” Biden has pushed drug makers to lower insulin costs, hotel chains to reduce fees and tried to diversify the meat-packing industry after beef prices skyrocketed in the aftermath of the pandemic.

Biden’s pitch for lower supermarket prices comes ahead of the Democrat’s November bid for re-election. A cavalcade of strong economic data – including blockbuster jobs and wage numbers on Friday – has not translated into good approval ratings for Biden, with voters still saying they are concerned about high costs.

Consumer confidence is improving, Bernstein said, citing the University of Michigan consumer survey that showed sentiment rising to its highest level since July 2021 and noting the recent strong U.S. stock market run.

“As inflation continues to ease and the job market remains tight and real wages and wage growth continue to beat price growth, that should start to show up as improved confidence,” he said.

“We’re also working hard to lower costs – actual lower costs, not just lower inflation,” said Bernstein, citing eggs, milk, appliances, airfares, used cars and gas as particularly sensitive areas for Americans.

While eggs only account for 0.1% of the consumer price index, Bernstein said, “in the national psyche it’s a lot bigger than that and we’re very cognizant of that.”

The United Nations food agency’s world price index fell in January to its lowest level in nearly three years, driven by declines in cereals and meat.

Kroger and Albertsons plan to close on a proposed $24.6 billion merger later this year, pending an antitrust review amid fears that the deal could raise prices.

“We agree with President Biden,” a Kroger spokesperson said. “Too many grocers in America have increased margins in contrast to Kroger.”

The spokesperson added that the merger would “lower prices for even more of America’s consumers by delivering at least half a billion in additional price investments at Albertsons stores.”

A spokesperson for the National Grocers Association, which represents independent grocers, called for stricter antitrust enforcement and said “the nation’s largest retailers have used their muscle to force food suppliers to offset higher production costs by charging their smaller rivals higher prices.”

(Reporting by Trevor Hunnicutt; Editing by Heather Timmons and Sandra Maler)

By Samrhitha A, Aishwarya Venugopal and Chuck Mikolajczak

(Reuters) -Meta Platforms added over $214 billion in stock market value on Friday, with its shares surging to a record high after the Facebook parent declared its first dividend and posted robust results.

Meta’s stock jumped as much as 23% and was last up 21.4%, on track for its third biggest daily percentage increase since its 2012 Wall Street debut. Its stock market value now stands at more than $1.2 trillion.

Days ahead of Facebook’s 20th anniversary, Meta late on Thursday authorized an additional $50 billion in share repurchases and said its quarterly dividend would be 50 cents per share.

While dividends are associated with mature, slow-growth companies, Meta’s is the fourth offered by Wall Street’s most valuable technology-related heavyweights, along with Apple, Microsoft and Nvidia.

“Paying a dividend suggests the company wants to reboot its reputation and be taken more seriously. But ultimately the amount being paid is only a token gesture,” said Dan Coatsworth, an investment analyst at AJ Bell.

The dividend plan means a hefty payout for CEO Mark Zuckerberg, who owns about 350 million Meta Class A and Class B shares. The Facebook co-founder could get about $175 million every quarter.

Optimism about the potential for artificial intelligence contributed to a 24% rally in the S&P 500 last year, with Meta, Nvidia, Microsoft and Broadcom recently hitting record highs. With Friday’s gain, Meta is now up 35% in 2024.

The world’s biggest social media company flagged strong ad sales and a rebound in user growth during its fourth-quarter results that saw its revenue surge 25%. Its forecast for current-quarter revenue also exceeded analysts’ estimates.

Surging revenue, combined with an 8% drop in costs and expenses after eliminating more than 21,000 jobs since late 2022, allowed Meta to triple its net income to $14.02 billion.

“The ‘Year of Efficiency’ has paid off, with both headcount and costs dropping, and Meta exceeding our expectations for full-year 2023 ad revenue,” said Jasmine Enberg, principal analyst at Insider Intelligence.

While Meta’s dividend is small compared to many companies, it could make its stock more attractive to a broader swathe of investors, including exchange-traded funds focused on stocks that pay dividends.

Meta’s dividend yield is about 0.4% following Friday’s stock rally. By comparison, Apple’s dividend yield is about 0.5%, while Microsoft’s is 0.7% and Nvidia’s is under 0.1%, according to LSEG.

“This can start attracting investors who really do look for dividends and more steady income,” said Brian Jacobsen, Chief Economist at Annex Wealth Management.

Meta has been spending billions of dollars over the past decade to boost its computing capacity for generative AI products it is adding to Facebook, Instagram and WhatsApp, and to hardware devices such as its Ray-Ban smart glasses.

(Reporting by Aishwarya Venugopal and Samrhitha Arunasalam in Bengaluru; Additional reporting by Medha Singh, Akash Sriram and Yuvraj Malik, and by Noel Randewich in Oakland, Calif.; Editing by Alden Bentley, Shounak Dasgupta and David Gregorio, Kirsten Donovan)

By Niket Nishant

(Reuters) -U.S. regional bank stocks recovered slightly on Friday from a brutal two-day sell-off sparked by investor concerns that New York Community Bancorp’s dismal earnings signaled broader problems for the sector.

The KBW Regional Banking Index gained 0.2%, reversing a dip early in the trading session. If the gains hold, the index will post its first positive day after three consecutive sessions of losses.

NYCB shares, which fell nearly 45% over the last two sessions after the lender slashed its dividend and posted a surprise loss on commercial real estate (CRE) loans, were up nearly 6% on Friday.

Raymond James on Friday said in a note that its analysts who participated in a webinar the firm hosted with NYCB’s management “came away comforted” that the bank’s deposits are very stable.

“Given deposit stability, the recent reserve build, still strong capital, and proactive cooperation by management to achieve new regulatory requirements, we believe the stock appears attractive for more aggressive investors with a longer term view,” the brokerage said.

Shares of Valley National Bancorp, Citizens Financial Group and some other mid-size banks also rose on Friday, boosting the view among some investors that NYCB’s problems and the subsequent sell off were a one-off.

“A lot of the banks have been proactive in dealing with their loan issues, and their credit quality doesn’t seem to be deteriorating as much as people thought in general,” said Tom Plumb, CEO of Plumb Funds.

In an email on Thursday, an NYCB spokesperson said the bank’s share price would recover “as the market continues to appreciate the value-enhancing actions” the bank had taken.

Over the last two sessions, short sellers targeting shares of regional banks were up about $1.4 billion in paper profits, according to data and analytics company Ortex.

CRE FEARS

NYCB, a major CRE lender in New York, on Wednesday boosted its provisions for credit losses by 345%, part of which was allocated to its CRE portfolio. NYCB said it took a hit on two separate loans.

“Part of NYCB’s 45% two-day plunge was due to the bank not being diversified from a loan perspective,” said CFRA analyst Alexander Yokum. “NYCB is overweight both commercial real estate office and multi-family loans and thus recent deterioration in these areas has had an outsized impact on the company.”

The bank’s disclosure re-ignited some investor worries that other lenders may be forced to crystallize CRE losses amid high interest rates and lingering pandemic office vacancies.

The Federal Reserve this week held rates steady while Fed Chair Jerome Powell said inflation remained too high, prompting traders to reprice the expected first rate cut from March and into May, according to futures data. Several banks have warned that elevated borrowing costs could lead to more borrowers defaulting on their loans this year.

Meanwhile, shares of Japan’s Aozora Bank slumped to a three-year low in Tokyo after it took a huge loan-loss provision against U.S. office loans.

Some investors said data released on Friday showing that U.S. job growth surged last month at well above the pre-pandemic pace and wage growth accelerated was a positive for lenders.

“For commercial banks, this should improve the outlook. There’s a lot of worry about defaults rising, but if the labor market is still humming, defaults shouldn’t rise too quickly,” said Brian Jacobsen, chief economist at Annex Wealth Management.

(Reporting by Niket Nishant, Chibuike Oguh and David French; Editing by Sriraj Kalluvila, Michelle Price, Kirsten Donovan and Leslie Adler)

By Katie Paul and Yuvraj Malik

(Reuters) -Meta Platforms issued its first dividend days ahead of flagship social network Facebook’s 20th anniversary, while reporting revenue and profit that beat expectations on robust ad sales in the holiday shopping period.

Shares soared more than 14% after the bell, extending a long recovery that saw Meta hit record highs in recent weeks for the first time in over two years.

The company’s stock market valuation surged by more than $140 billion. The increase alone was more than quintuple the entire value of smaller social media rival Snap Inc.

Meta, one of the tech sector’s original unicorns, said the dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.

“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta CEO Mark Zuckerberg said in a prepared statement.

Revenue rose 25% to $40.1 billion for the quarter ended Dec. 31. Analysts were expecting revenue of $39.2 billion, according to LSEG data.

Earnings per share rose more than 200% to $14 billion, or $5.33 per share, exceeding expectations of $4.97 per share, according to LSEG data. 

“This was one of the most impressive quarters – intrinsically and vs. expectations,” said  Evercore ISI analyst Mark Mahaney.

Meta forecast first quarter revenue of $34.5 billion to $37 billion, above Wall Street expectations of $33.8 billion. It said it expects full-year 2024 total expenses to be unchanged at $94 billion to $99 billion.

On Tuesday, fellow digital ads heavyweight Alphabet posted results that disappointed Wall Street, after holiday season advertising sales came in below expectations.

Shares of Meta, which also owns Instagram and WhatsApp, have been steadily climbing back from a meltdown in 2022 that wiped out more than three-quarters of the company’s one-time value.

Its recovery has been aided by a rebound in user growth and digital ad sales. It also has shed more than 21,000 employees since late 2022, ending the year with 67,300 employees.

MORE METAVERSE, AI INVESTMENTS

Improvements to the social media business have made investors more tolerant of Meta’s undiminished spending, as it pours billions of dollars into “metaverse” technologies and building out its artificial intelligence infrastructure.

On Thursday executives doubled down on aggressive investments into both areas.

The company’s metaverse-oriented Reality Labs division handily beat revenue expectations for the fourth quarter, posting record sales of $1.1 billion from “strong sales” of its Quest device over the holiday season, Zuckerberg told analysts after the report. Investors had been expecting $804 million, according to LSEG data.

Meta said it still expected operating losses for Reality Labs to “increase meaningfully” as it invests more in augmented and virtual reality in 2024.

But even before the company delivers the most sophisticated capabilities envisioned for those devices, Zuckerberg said the latest version of its Ray-Ban smart glasses, with a built-in AI assistant, had been an early surprise hit with consumers.

“We thought we would have to build full displays and holograms” before the smart glasses would become mainstream, he said. “And now it’s quite possible that … AI assistants built in will be the killer app.” 

Results demonstrated how its core advertising business helped fuel investments. 

Meta said ad impressions, or views, increased 21% from a year ago and the average price per ad increased 2%. 

“Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations,” said Debra Aho Williamson, an independent tech analyst and former principal analyst at eMarketer.

“The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”

(Reporting by Katie Paul in New York and Yuvraj Malik in Bengaluru; Additional reporting by Sheila Dang in Austin and Noel Randewich in San Francisco; Editing by Arun Koyyur, David Gregorio and Kenneth Li)

By Katie Paul and Yuvraj Malik

(Reuters) -Meta Platforms issued its first ever dividend days ahead of flagship social network Facebook’s 20th anniversary, while reporting revenue that beat expectations as a result of robust ad and device sales in the holiday shopping period.

Shares soared more than 14% after the bell, extending a long recovery in which Meta hit record highs in recent weeks for the first time in over two years.

The company’s stock market valuation surged by about $130 billion, pushing it to five times that of smaller rival Snap Inc.

The company, one of the tech sector’s original unicorns, said the dividend would be 50 cents per share. It also announced it had authorized an additional $50 billion in share repurchases.

“We’ve made a lot of progress on our vision for advancing AI and the metaverse,” Meta CEO Mark Zuckerberg said in a prepared statement.

Revenue rose 25% to $40.1 billion for the quarter ended Dec. 31. Analysts were expecting revenue of $39.2 billion, according to LSEG data.

“This was one of the most impressive quarters – intrinsically and vs. expectations,” said  Evercore ISI analyst Mark Mahaney.

Meta forecast first quarter revenue of $34.5 billion to $37 billion, above Wall Street expectations of $33.8 billion. It said it expects full-year 2024 total expenses to be unchanged at $94 billion to $99 billion.

On Tuesday, fellow digital ads heavyweight Alphabet posted results that disappointed Wall Street, after holiday season advertising sales came in below expectations.

Shares of Meta, which also owns Instagram and WhatsApp, have been steadily climbing back from a meltdown in 2022 that wiped out more than three-quarters of the company’s one-time value.

Its recovery has been aided by a rebound in user growth and digital ad sales. It also has shed more than 21,000 employees since late 2022.

Improvements to the social media business have made investors more tolerant of Meta’s undiminished spending, with investments in “metaverse” technologies and billions to build out its artificial intelligence infrastructure.

Meta said ad impressions, or views, increased 21% from a year ago and the average price per ad increased 2%. 

“Meta ended 2023 on an extremely strong note, with revenue soaring above analyst expectations,” said Debra Aho Williamson, an independent tech analyst and former principal analyst at eMarketer.

“The company can talk all it wants to about AI and the metaverse, but it’s still a social media company that gets nearly all its revenue from advertising, and advertisers still clearly love Meta.”

The company’s metaverse-oriented Reality Labs division handily beat revenue expectations for the fourth quarter, posting record sales of $1.1 billion from “strong sales” of its Quest device over the holiday season, Zuckerberg told analysts after the report. Investors had been expecting $804 million, according to LSEG data.

Meta said it still expected operating losses for Reality Labs to “increase meaningfully” as it invests more in augmented and virtual reality in 2024.

(Reporting by Katie Paul in New York and Yuvraj Malik in Bengaluru; Additional reporting by Noel Randewich in San Francisco; Editing by Arun Koyyur, David Gregorio and Kenneth Li)

By Saqib Iqbal Ahmed and Laura Matthews

NEW YORK (Reuters) – Options volume on SPDR S&P Regional Banking ETF surged for a second straight session on Thursday, spurred by bearish trading, as a sell-off in shares of U.S. regional banks continued after trouble at New York Community Bancorp.

KRE shares fell 2% on Thursday while NYCB slipped 8%, extending its losses from Wednesday when the stock experienced a record single-day drop of 37.6% after announcing a surprise loss and a 70% divided cut.

KRE options volume jumped to 490,000 contracts, by 1 p.m. (1800 GMT) with contracts changing hands at seven times the usual pace, according to Trade Alert data. Put options, typically bought to express a bearish or defensive view, outnumbered calls, generally a bullish play, nearly 2-to-1.

With the New York Community Bancorp (NYCB) shares just below $6, put options that would make money if the stock slipped below $4 by mid March, were one of the busiest contracts with nearly 26,000 traded, signaling worries over further losses.

While many analysts and investors said the problems at NYCB were mostly unique, traders were not taking a chance with the sector as a whole.

“Options traders are defensive,” said Matt Amberson, principal at options analytics firm ORATS. “They think this is more systemic.”

Options on New York Community Bancorp changed hands at 20 times their usual pace with sentiment leaning towards bearish bets, Trade Alert data showed.

“After the disastrous NYCB move, it is not surprising that the other regional banks are under pressure,” said Seth Hickle, derivatives portfolio manager, at Innovative Portfolios.

“Analysts will … have a deeper dive into books of these regional banks but before the analysis can be done traders have already made up their minds and reduced exposure to this area,” he said.

On paper, short sellers were up about $685 million, with $105 million of those gains coming from bearish bets on New York Community Bancorp, according to estimates from data and analytics company Ortex.

Still, bearish investors were taken as much by surprise by the hit to the sector, as the rest of the market. Overall short interest for the sector slipped to $13.70 billion, down about $838 million, over the last 30 days, data from S3 Partners showed.

Meanwhile, KRE 30-day implied volatility – or how much traders expect the KRE shares to swing in the near term – rose to 30.87%, a 3-month high, a sign of increased nervousness about the outlook for the sector. The gauge, however, remains well below the peak of 82%, early last year after the collapse of SVB Financial Group and several regional banks.

“There is some stress being priced in but nowhere near the anxiety from the period around SVB,” said Stuart Kaiser, head of equity trading strategy at Citigroup.

Some in the options market also felt the broad sell-off after NYCB’s woes were overdone and bought up call options on KRE that would benefit from a share price rebound, said JJ Kinahan, CEO of IG North America and president of Tastytrade.

“I think the question will remain from Wall Street, is this going to be similar to an SVB where it was contained quickly to one to two banks, or is this the first sign where we might see contagion?” he said.

(Reporting by Saqib Iqbal Ahmed and Laura Matthews; editing by Megan Davies, David Ljunggren and Nick Zieminski)

(Reuters) – Alps Global Holding Berhad on Wednesday agreed to go public in the U.S. through a merger with a blank-check company in a deal that valued the biotechnology company at $1.6 billion.

The proceeds of the deal with special purpose acquisition company Globalink Investment will be used for working capital, growth capex and other general corporate purposes, the companies said.

Blank-check mergers allow private firms to sidestep a lengthy IPO process to list their shares on bourses. They had largely fallen out of favor following a bumper run in 2020 and 2021 due to intense scrutiny from the U.S. regulators.

The merger agreement is expected to close in the second quarter after which the combined company will be named “Alps Life Science Inc”. It is expected to be listed on the Nasdaq.

Founded in 2017, Alps focuses on developing personalized medicine using technologies such as genomics DNA, mRNA, and cellular therapy.

(Reporting by Manya Saini in Bengaluru; Editing by Arun Koyyur)