Oil Falls Further After Last Week’s 13% Drop
March 20, 2023
Wall Street opens in dispersed order, stabilization in sight but First Republic falls
March 21, 2023By Amruta Khandekar and Ankika Biswas
Stocks gain on hopes bank crisis is easing
March 21 (Reuters) – U.S. stock index futures gained on Tuesday as the rescue of Credit Suisse allayed some concerns of a bank contagion, while investors awaited the outcome of the Federal Reserve’s monetary policy meet.
Traders now largely expect a 25-basis-point rate hike after the Fed’s two-day meeting concludes on Wednesday, a dramatic turnaround from expectations of a 50 bps increase before the banking crisis triggered by the collapse of Silicon Valley Bank and Signature Bank (SBNY.O) earlier this month.
While the state-backed takeover of Credit Suisse by UBS (UBS.N) as well as steps taken by central banks to boost liquidity have eased fears of a contagion to the broader banking sector, analysts still believe the crisis hasn’t been fully averted.
“While it’s a plus that banks so far have been rescued in the sense of deposits, I don’t think we’ve seen the end of the turmoil,” said Peter Cardillo, chief market economist at Spartan Capital Securities.
“The last thing the Fed wants to do is to create havoc in the markets … and the best thing that they could do is just take a pause and then revisit it in May.”
Shares of beaten-down regional lenders climbed in premarket trade, with First Republic Bank (FRC.N) rebounding 22.7% after hitting a record low on Monday.
JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon is leading talks with other big banks on fresh steps to stabilise First Republic with a possible investment into the lender, the Wall Street Journal reported on Monday.
Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 20, 2023. REUTERS/Brendan McDermid
Peers PacWest Bancorp (PACW.O) and Western Alliance Bancorp (WAL.N) rose 4.0% and 3.4%, respectively.
Major U.S. banks such as JPMorgan, Citigroup (C.N) and Bank of America (BAC.N) also advanced between 1.9% and 2.7% before the bell.
U.S. Treasury yields rose for a second straight day, with yield on the two-year note, which best reflects interest rate expectations, last at 4.10%.
