Futures rise as banking crisis fears ebb, economic data in focus

By Amruta Khandekar and Ankika Biswas

March 29 (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 (TFC.N) and Western Alliance Bancorp (WAL.N) up 1% and 0.6%, respectively, while First Republic Bank (FRC.N) edged 0.7% lower.

Larger peers Bank of America (BAC.N), Goldman Sachs (GS.N) and JPMorgan Chase & Co (JPM.N) 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 (MSFT.O), Alphabet (GOOGL.O) and Meta Platforms (META.O) up 0.8% to 1%.

“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.

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 (.VIX), 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 (MU.O) 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 (LULU.O) jumped 14.9% after forecasting annual sales and profit above estimates, while Lucid Group Inc (LCID.O) gained 2.5% on plans to lay off about 18% of its workforce.