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Futures muted as yields rise amid easing bank contagion fears


Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 27, 2023. REUTERS/Brendan McDermid

U.S. stock index futures were subdued on Tuesday as Treasury yields rose as fears about a banking crisis eased following First Citizens BancShares’ U.S. regulator-backed deal to buy failed Silicon Valley Bank.

Benchmark 10-year yields rose 4 basis points to 3.57%, while the 2-year yields were up 7 basis points to 4.03%, weighing on growth stocks like Apple Inc (AAPL.O), Meta Platforms (META.O) and Alphabet Inc (GOOGL.O) in premarket trade.

“The rebound in yields suggested that a calmer tone was starting to prevail in the short term, even as sentiment seems likely to remain on the cautious side over the next few days,” said Michael Hewson, chief market analyst at CMC Markets.

Shares of First Citizens BancShares Inc (FCNCA.O) were flat in light premarket trading after surging more than 50% on Monday when it struck a deal to acquire the deposits and loans of failed Silicon Valley Bank.

The announcement of the deal drove the S&P 500 (.SPX) and Dow Jones Industrial Average (.DJI) higher on Monday, while the Nasdaq Composite (.IXIC) closed lower, led by a decline in technology-related stocks.

Big U.S. banks including JP Morgan Chase & Co (JPM.N), Bank of America (BAC.N) and Citigroup (C.N) were up between 0.5% and 0.7% on Tuesday. Regional banks also rose, led by First Republic Bank’s (FRC.N) 2.7% gain after a 12% rally on Monday.

Later in the day, Fed Vice Chair for Supervision Michael Barr will testify before the Senate Committee on Banking, Housing and Urban Affairs on “bank oversight” in the first of several hearings on the collapse of Silicon Valley Bank and Signature Bank.

Money market bets are now equally split between the Fed raising rates by 25 basis points and pausing its policy meeting in May, after being largely tilted towards a no-hike scenario at the end of last week, according to CME’s Fedwatch tool.

However, markets are expecting a sharp easing in rates thereafter.

At 5:19 a.m. ET, Dow e-minis were up 49 points, or 0.15%, S&P 500 e-minis were up 1.25 points, or 0.03%, and Nasdaq 100 e-minis were down 14.5 points, or 0.11%.

Shares of Lyft Inc (LYFT.O) were up 4.0% premarket after the ride-hailing firm hired former (AMZN.O) executive David Risher as its new chief.

Virgin Orbit Holdings (VORB.O) was down 13% after the cash-strapped company said it will extend an unpaid furlough for most of its employees as talks seeking new funding continue.

The Conference Board will release consumer confidence data later in the day, which is expected to show prevailing business conditions marginally fell last month.

Investors will also closely monitor earnings from Micron Technology Inc (MU.O), Walgreens Boots Alliance Inc (WBA.O), Lululemon Athletica Inc (LULU.O) and McCormick & Co Inc (MKC.N).

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