U.S. stocks were set to open lower on Wednesday as turbulence at Credit Suisse renewed fears of a banking crisis, while U.S. economic data kept alive hopes of a less aggressive monetary policy move by the Federal Reserve next week.
U.S.-listed shares of Credit Suisse slid 25.9% and were set to open at a record low, after the Swiss bank’s largest investor said it could not provide more financial assistance to the lender.
Fuelling hopes of a less hawkish Fed policy, data showed retail sales fell 0.4% last month from a growth of 3.2% in January, while economists polled by Reuters had expected a contraction of 0.3%.
A separate report showed producer prices rose 4.6% in February on an annual basis, against expectations of a 5.4% rise.
Yield on the 10-year Treasury notes fell to 3.487%, while on the two-year note, which best reflects interest rate expectations, fell to a session low of 3.88% after the data.
Traders now saw equal chances of a 25-basis-point-rate hike and a pause at the Fed’s March meeting.
After the collapse of SVB Financial (SIVB.O) and peer Signature Bank (SBNY.O), assurances and emergency measures by U.S. authorities had allayed some worries about the health of the other banks, helping regional lenders stage a rebound in the previous session.
However, regional banks erased early gains in premarket trading on Wednesday, with First Republic Bank (FRC.N) down 6.4%. Peers Western Alliance Bancorp (WAL.N) and PacWest Bancorp (PACW.O) slid 10.1% and 18.6%, respectively.
Big U.S. banks such as JPMorgan Chase & Co (JPM.N), Citigroup (C.N) and Bank of America Corp (BAC.N) fell between 3.7% and 5.3%.
“Concerns about Credit Suisse led to futures declining so notably for the last hour and a half,” said Michael James, managing director of equity trading at Wedbush Securities.
“PPI print was certainly much better than expectations and. retail sales were about in line. That’s why you’ve seen, at least initially, a bounce back in futures.”
Wall Street rallied in the previous session after a highly anticipated inflation report showed a slowdown in February consumer prices growth, spurring hopes of a smaller rate hike at the conclusion of the Federal Reserve’s meeting on March 22.
At 8:49 a.m. ET, Dow e-minis were down 612 points, or 1.9%, S&P 500 e-minis were down 76 points, or 1.94%, and Nasdaq 100 e-minis were down 191.5 points, or 1.57%.
Shares of Charles Schwab Corp (SCHW.N) edged down 1.8% in premarket trading, a day after its chief executive said the bank and brokerage have enough liquidity and were not seeking capital or deals.