Benzinga - The mood on Wall Street remains tentative, with the index futures pointing to a modestly higher opening. Some of the positive sentiment is attributable to the coordinated action announced by five of the world’s biggest central banks to ease liquidity strain.
Cues From Past Week’s Trading:
Stocks closed the week ended March 17 mostly higher despite the volatility seen amid the continuing news flow on the banking crisis. The S&P 500 and the Nasdaq Composite indices recorded weekly gains of 1.43% and 4.41%, respectively, while the Dow Industrials in which financial stocks have over 15% weighting edged down 0.15%.
The mood in the past week alternated between hope and despair as traders digested the government’s rescue plan to backstop all Silicon Valley Bank deposits, reports of trouble at First Republic Bank (NYSE: FRC) and, subsequently, the private banks’ rescue package for the bank.
Issues at Credit Suisse AG (NYSE: CS) also simmered through the week, which culminated in a Swiss National Bank-brokered deal to be bought by peer UBS Group Inc. (NYSE: UBS) over the weekend.
| Nasdaq Composite | +4.41% | 11,630.51 | |
| S&P 500 Index | +1.43% | 3,916,64 | |
| Dow Industrials | -0.15% | 31,861.98 |
The fallout from the banking turmoil has created a wave of technical damage across the equity markets and the degree of oversold conditions suggests a potential relief rally could be on the horizon, said LPL Chief Technical Strategist Adam Turnquist.
Drawing inspiration from historical performance, the analyst noted that whenever 20% or more of S&P 500 stocks reached oversold levels as seen last week, the average return over the following three months was 4.2%, outpacing the average three-month return of 2% during the timeframe.
“A breakdown below 3,783 would raise the odds for a retest of the October lows and trigger a bearish signal in the December Low indicator,” he added.
Futures Today
| Nasdaq 100 Futures | +0.15% | |
| S&P 500 Futures | +0.11% | |
| Dow Futures | +0.04% | |
| R2K Futures | +1.13% |
Upcoming Economic Data:
The economic calendar for the day is fairly light, with no market-moving data due for the day. Nevertheless, momentum picks up on Tuesday, as the Federal Open Market Committee begins a two-day meeting. What was previously expected to be an uncomplicated 25 basis point hike, could be a tougher decision now, given the unraveling of the financial sector in the wake of the banking crisis.
The Treasury will auction 4-week and 8-week bills at 11:30 a.m. EDT.
The Fed will release data on reserve balances, which is otherwise the money depository institutions maintain in their accounts at the regional Fed banks.
Stocks In Focus:
- New York Community Bankcorp. Inc. (NYSE: NYCB) rose over 10% in premarket trading after Keefe, Bruyette & Woods upgraded the stock from Market Perform to Outperform. The Federal Deposit Insurance Corporation announced that the bank has agreed to buy deposits and certain portfolios of the Signature Bridge Bank.
- On the other hand, the First Republic Bank extended its losses and fell over 16.5% amid rumors of a potential buyout. The company’s credit rating was further downgraded by S&P.
- Opendoor Technologies Inc. (NASDAQ: OPEN) slumped over 12%.
- Foot Locker Inc. (NYSE: FL) and Pinduoduo Inc, (NASDAQ: PD) are among the companies reporting ahead of the market open.
Dell Technologies Inc. (NYSE: DELL): Goldman Sachs initiates with Buy rating
Hewlett-Packard Enterprise Company (NYSE: HPE): Goldman Sachs initiates with Hold rating
- HP Inc. (NYSE: HPQ): Goldman Sachs initiates with Hold rating
- FedEx Corp. (NYSE: FDX): Jefferies raises price target from $175 to $225.
- Microsoft Corp. (NASDAQ: MSFT): Evercore ISI ups price target from $280 to $295
- Unum Group (NYSE: UNM): Jefferies upgrades from Hold to Buy
Crude oil futures fell further on Monday and dropped by the psychological barrier of $65. A barrel of WTI-grade crude oil slumped 2.96% to $64.95.
Treasury yields were also seen extending their slide. The yield on the benchmark Treasury note slipped 0.039 percentage points to 3.356%
The major Asian markets fell across the board on Monday, while European stocks were mixed in late-morning trading as traders take stock of the situation following Credit Suisse’s sale.
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