Futures rise as banking crisis fears ebb, economic data in focus
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[March 29, 2023] By
Amruta Khandekar and Ankika Biswas
(Reuters) -U.S. stock index futures climbed on Wednesday as easing
worries about a banking crisis lifted risk sentiment, while investors
awaited economic data to assess the Federal Reserve's monetary policy
path.
Market jitters about stress in the banking system have been soothed in
recent days by a U.S. regulator-backed sale of failed lender Silicon
Valley Bank's assets as well as lack of fresh signs of trouble in the
sector since the buyout deal.
Regional U.S. bank stocks were mixed, with lenders such as Truist
Financial Corp and Western Alliance Bancorp up 1% and 0.6%,
respectively, while First Republic Bank edged 0.7% lower.
Larger peers Bank of America, Goldman Sachs and JPMorgan Chase & Co rose
between 0.7% and 1.6% in premarket trade.
A retreat in Treasury yields, which had rebounded over the past two
sessions amid ebbing banking concerns, lifted major technology and
growth stocks, with Microsoft Corp, Alphabet and Meta Platforms up 0.8%
to 1%.
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"Markets are calmer as the tension of the banking situation is
lessening. The fact that yields are a bit lower this morning is likely
to induce stock markets to move higher," said Peter Cardillo, chief
market economist at Spartan Capital Securities in New York.The banking
turmoil, which started earlier in March with the collapse of Silicon
Valley Bank, has led markets to reprice expectations of future monetary
tightening by the Federal Reserve.
Traders' bets are tilted towards no rate hike by the Fed in May, with
odds of a 25-basis-point increase at 42%, according to CME Group's
Fedwatch tool.
"We'll (likely) see the Fed ending its campaign at the May meeting and
the reason for that is because recession is not far away," Cardillo
said.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., March 28, 2023.
REUTERS/Brendan McDermid
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Michael Barr, the Fed's vice chairman for supervision, will testify
before Congress for a second day after he criticized SVB's risk
management on Tuesday.
Investors will also monitor a report on pending home sales later in
the day. A key inflation reading expected at the end of the week
will provide more clues on the Fed's monetary tightening plans.
The CBOE volatility index, known as Wall Street's fear gauge, fell
to its lowest since March 9, reflecting easing investor anxiety.
At 6:32 a.m. ET, Dow e-minis were up 244 points, or 0.75%, S&P 500
e-minis were up 35.25 points, or 0.88%, and Nasdaq 100 e-minis were
up 109.25 points, or 0.86%.
Among major stock moves, Micron Technology Inc advanced 2.3% after
the chipmaker forecast a boost to sales in 2025 from artificial
intelligence.
U.S.-listed shares of Alibaba Group Holding Ltd slipped 1.2% before
the bell, a day after touching an over one-month high on the
internet giant's revamp and listing plan.
Lululemon Athletica Inc jumped 14.9% after forecasting annual sales
and profit above estimates, while Lucid Group Inc gained 2.5% on
plans to lay off about 18% of its workforce.
(Reporting by Amruta Khandekar; Editing by Dhanya Ann Thoppil and
Vinay Dwivedi)
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