Futures rise as bank fears ebb after Credit Suisse rescue, Fed in focus
March 21, 2023
U.S. stocks hold gains as bank tensions ease and Fed decision looms
March 21, 2023The New York Stock Exchange opened on a mixed note on Monday, showing signs of stabilizing after a very choppy week, although jitters are struggling to dissipate, with US regional bank First Republic falling again.
Around 2:15 p.m. GMT, the Dow Jones gained 0.95%, the Nasdaq index yielded 0.31% and the broader S&P 500 index advanced by 0.42%.
Several signs suggest a lull in the New York market, including the VIX index, measuring market volatility, which stabilized on Monday.
Moreover, bond rates are taking a break after several roller coaster sessions. The yield on 10-year US government bonds stood at 3.45%, against 3.42% on Friday at the close.
Whether on the Dow Jones or Nasdaq side, many values are evolving within tight margins, in a wait-and-see climate.
However, “the takeover of Credit Suisse by UBS has not really calmed investors,” according to Peter Cardillo of Spartan Capital. “The market remains uncertain and we are heading for a mixed session.”
The announcement on Sunday of the absorption by the first Swiss bank of its great national rival marked a new stage in the crisis which has shaken the sector for ten days.
In the first exchanges, the Californian bank First Republic unscrewed again (-15.68%), down more than 82% since the start of the turbulence.
“This indicates that the crisis is not over,” said Peter Cardillo. “And people are expecting more bad news from banks.”
Nonetheless, despite First Republic’s slide, regional banks are once again in demand. Abused throughout the last week, the Californian PacWest jumped (+ 18.19%), as did First Citizens (+ 9.94%), based in Raleigh (North Carolina), or the Texas-based Comerica (+7, 36%).
The little-known New York Community Bancorp (NYCB) soared (+ 38.38%) after the announcement on Sunday of the takeover of part of the loan and deposit portfolio of its competitor Signature Bank, in bankruptcy. The assets will be housed within Flagstar Bank, a subsidiary of NYCB.
The big American banks were also well oriented, with JPMorgan Chase (+1.76%), Goldman Sachs (+1.92%) and Citigroup (+1.68%) at the forefront.
The banking crisis “makes it difficult for investors to predict whether or not the Fed (American central bank) will raise its key rate this week” and to know how its decision will be interpreted, commented, in a note, Patrick O’Hare of Briefing.com.
The scenario favored by operators remains that of a rise of a quarter of a point on Wednesday, before a break, followed by several declines by the end of the year.
The Fed meeting on Tuesday and Wednesday will also see the communication of updated projections from members of the Monetary Policy Committee (FOMC) for inflation, unemployment and growth, as well as rates.
In the table of values, the chain of sporting goods stores Foot Locker climbed (+ 2.08%) after the publication of a quarterly turnover above expectations. The New York group also reported forecasts higher than analysts’ expectations for the current financial year (which will end in early February 2024).
After doing well last week, against all odds, the technology sector was down, like Microsoft (-2.82%), Amazon (-3.06%) and the semiconductor manufacturer AMD (-4.60%).
