Five things you need to know before the market opens on Wednesday March 15:
1. -- Stocks Futures Slide As Bank Concerns Lingers
U.S. equity futures moved lower Wednesday, while the dollar built gains against its global peers and Treasury yields stabilized, as investors remained focused on both turmoil in the global financial sector following the collapse of Silicon Valley Bank and its impact on the Federal Reserve's upcoming rate decision.
First Republic Bank, a San Francisco-based lender and wealth manager, lead a storming rebound in regional bank shares Tuesday following moves by the Treasury to back deposits at SVB and the Fed's launch of a multi-billion dollar backstop lending program.
The gains helped U.S. stocks into a solid overall session, with the S&P 500 rising the most since late January and the Dow Jones Industrial Average snapping a three-day losing streak. Exchanges volumes were robust, as well, with around 13.84 billion shares changing hands, nearly 20% higher than the near-term average.
Regional banks are once again higher in pre-market trading Wednesday, despite a move late Tuesday by Moody's Investors Service to lower its rating on the U.S. banking sector to 'negative' from 'stable', with First Republic FRC rising 13.2% and PacWest Bancorp gaining 5.75%.
Some of those gains were ultimately pared, however, alongside mounting declines in Europe following news that the Saudi National Bank has refused to offer further financial support to troubled Swiss lender Credit Suisse Group.
Interest rate traders, however, remain slightly more cautious with respect to the Fed's likely reaction to a simmering bank crisis, which was complicated by a modestly faster-than-expected reading of core inflation that marred an otherwise steady February CPI report yesterday.
The CME Group's FedWatch suggests a 24% chance that the Fed will hold rates steady at between 4.5% and 4.75% when it meets next week in Washington, along the bulk of wagers suggest a 25 basis point hike at this meeting, and again in May, before the Fed considers any kind of pause in its tightening cycle.
In other markets, benchmark 2-year Treasury note yields were marked 5 basis points higher from last night's levels at 4.323% in overnight trading, with 10-year paper pegged at 3.661%. The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was marked 0.46% higher at 104.064.
Market volatility was also in retreat, with the CBOE Group's VIX index falling 10.8% in the overnight session to 23.64 points, down some 22% from its Monday afternoon peak, suggesting traders see daily swings on the S&P 500 of around 57 points, or 1.45%, over the near term.
On Wall Street, futures contracts tied to the S&P 500 are indicating a 46 point opening bell slide while those linked to the Dow Jones Industrial Average were looking at a 390 point decline. The tech-focused Nasdaq is looking at 110 point pullback.
In overseas markets, Europe's Stoxx 600 fell 1.55% in early Frankfurt trading, thanks in part to an extended slump in Credit Suisse shares which pulled other European bank stocks lower, while Britain's FTSE 100 was marked 1.53% lower in London ahead of the government's Spring Budget Statement.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 0.95% higher into the close of trading following stronger-than-expected economic activity data from China over the month of February while the Nikkei 225 closed 0.03% lower in Tokyo
2. -- Charles Schwab CEO Buys Group Shares
Charles Schwab (SCHW) shares edged lower in pre-market trading after the brokerage group, which had been caught in the downdraft of U.S. banking stocks, said it isn't seeking new capital.
CEO Walt Bettinger, who has lead Schwab since the 2008 financial crisis, told Reuters that while there is some mis-match between client assets in its banking division and 'held-to-maturity' assets on its balance sheets, "our clients are not reacting in the manner that the doomsday scenario would indicate.'
Schwab, which has higher unrealized losses in it bond portfolio of around $14.1 billion, also have ample liquidity access, including $100 billion cash on hand, as well as a deposit base that is 82% covered by FDIC insurance.
"Our available for-sale portfolio is short in duration and high in quality, and our held-to-maturity is slightly longer in duration but still short compared to many people, and very high-quality," Bettinger, who said he purchased around 50,000 Schwab shares for his own account on Tuesday, told Reuters.
Charles Schwab shares were marked 0.32% lower in pre-market trading to indicate an opening bell price of $56.50 each.
3. -- Credit Suisse Hits Fresh Record Low As Saudi Backer Declines Further Support
Credit Suisse Group (CSGKF) shares extended their recent run of declines, and hit a fresh record low Wednesday after a key Saudi investor declined to provide additional support to the troubled Swiss lender.
Saudi National Bank, which owns a $1.5 billion stake in Credit Suisse following the group's capital raising effort last year, said it was pleased with the bank's recent turnaround plans -- which include the separatio of its investment banking unit -- and noted that its equity capital ratios were consistent with Swiss regulations, but said it can't go over its current 9.9% threshold due to a 'regulatory issue'.
Credit Suisse has been suffering from a host of scandals and mis-steps over the past years that have triggered an exodus of client deposits from both its bank and wealth management divisions and said earlier this week that it found "material weaknesses" in its financial reporting and internal controls.
Credit Suisse's U.S.-listed shares were marked 15.1% lower in pre-market trading to indicate an opening bell price of $2.13 each. Its shares in Zurich were marked 9.65% lower and changing hands at a record low of 2.025 Swiss francs.
4. -- Foxconn Sees Muted Consumer Electronics Demand, Posts Softer Q4 Profits
Apple (AAPL) supplier Foxconn, the world's biggest contract chipmaker, forecast flat 2023 revenues and muted consumer electronics demand following a soft fourth quarter earnings report marred by disruptions at its 'iPhone City' plant in Zhengzhou, China.
Foxconn said revenue growth linked to components for cloud and network computing would be solid this year, but warned that consumer electronics demand "might decline slightly" from last year's levels.
Taiwan-based Foxconn, a key Apple assembler responsible for around 70% of the tech giant's iPhone shipments, posted fourth quarter profits of T$40 billion ($1.3 billion), down 3% from the same period last year, on sales of T$1.96 trillion
Apple shares were marked 0.32% lower in pre-market trading to indicate an opening bell price of $152.10 each.
5. -- Adobe Earnings On Deck With Figma Deal In Focus
Adobe Inc (ADBE) shares edged higher in pre-market trading ahead of the cloud software group's first quarter earnings after the closing bell.
Analysts expect the group to post an adjusted non-GAAP bottom line of $3.68 per share, essentially in line with the company's own forecast, on revenues of $4.623 billion.
Investors will likely be more focused on the fate of its $20 billion purchase of privately-held design startup Figma, unveiled last September, which was forecast to close this year. Bloomberg reported earlier this week that the U.S. Justice Department is likely to challenge the takeover, citing antirust concerns, sometime this month.
"We are engaged in constructive and cooperative discussions with regulators in the US, UK and EU among others,' Adobe said. "We continue to expect to close the transaction in 2023.
Adobe shares were marked 0.05% higher in pre-market trading to indicate an opening bell price of $333.51 each.
