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Wall St set to open lower after recent bounce; focus on banks

2023-03-28T13:05:27Z

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 indexes were set for a slightly lower open on Tuesday after a three-day rally in the S&P 500 and the Dow that was fueled by support measures for the banking sector and a deal for Silicon Valley Bank assets.

Bank shares rebounded sharply on Monday after First Citizens BancShares Inc (FCNCA.O) said it would acquire the deposits and loans of Silicon Valley Bank, whose collapse earlier this month sparked a selloff in the sector.

Shares of First Citizens BancShares Inc (FCNCA.O) slipped 0.6% in premarket trading after surging more than 50% on Monday.

Big U.S. banks including JP Morgan Chase & Co (JPM.N), Bank of America (BAC.N) and Citigroup (C.N) were up marginally. Regional banks also rose, led by First Republic Bank’s (FRC.N) 1.2% gain, after a 12% rise on Monday.

“The fact that we’ve got answers on Silicon Valley Bank, Signature Bank and Credit Suisse means that we have more answers than questions,” said Art Hogan, chief market strategist at B Riley Wealth in Boston.

“But there are still enough unknowns that the market hasn’t really declared an all-clear signal yet.”

Lawmakers are expected to put top U.S. bank regulators on the defensive over the unexpected failures of regional lenders Silicon Valley Bank and Signature Bank when they testify before Congress later on Tuesday.

Top regulatory officials for the Federal Reserve, Federal Deposit Insurance Corporation (FDIC) and Treasury Department will testify before congressional committees.

Money market bets are now split between the Fed raising interest rates by 25 basis points and a pause in 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. Investors expect a sharp easing in rates thereafter.

The Conference Board will release consumer confidence data later in the day, which is expected to show business conditions deteriorated marginally last month, making a case for a softer Fed policy stance.

The S&P 500 (.SPX) and Dow Jones Industrial Average (.DJI) rose on Monday after the SVB deal was announced, while the Nasdaq Composite (.IXIC) closed lower, led by a decline in technology-related stocks.

At 8:42 a.m. ET, Dow e-minis were down 45 points, or 0.14%, S&P 500 e-minis were down 8.5 points, or 0.21%, and Nasdaq 100 e-minis were down 25.25 points, or 0.2%.

Alibaba Group Holding climbed 9.6% after the firm said it plans to split its business into six main units covering e-commerce, media and the cloud.

Shares of Lyft Inc (LYFT.O) were up 5.0% after the ride-hailing firm hired former Amazon.com (AMZN.O) executive David Risher as its new chief.

Virgin Orbit Holdings (VORB.O) tumbled 19.4% after the cash-strapped company said it would extend an unpaid furlough for most of its employees as talks seeking new funding continue.

Walgreens Boots Alliance Inc (WBA.O) added 1.2% after the U.S. pharmacy’s quarterly profit beat Wall Street expectations.

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