US stock futures edged higher on Tuesday morning ahead of the release of key inflation data, with regional bank shares rallying and retaking some of their losses on the back of Silicon Valley Bank results.
Futures linked to the S&P 500 (^GSPC) added 0.5% ahead of the open, while futures on the Dow Jones Industrial Average (^DJI) Advanced 0.3%. The contract on the technology-heavy Nasdaq Composite (^IXIC) rose 0.4%.
Bond yields remained high. The yield on the benchmark 10-year US Treasury note ticked up to 3.6% on Tuesday morning from 3.54% on Monday. At the front end of the yield curve, the two-year yield rose 4.2%.
US stocks were mixed on Monday as Wall Street was volatile after federal banking regulators took aggressive action to contain the fallout of the SVB collapse.
The Federal Reserve will review Silicon Valley Bank’s results. The results will be released publicly by May 1, said the central bank on Monday. The review will be led by Fed Vice President for Supervision Michael Barr.
“The events surrounding the Silicon Valley bank demand a thorough, transparent and swift review by the Federal Reserve,” Fed Chair Jerome Powell said in a statement.
The move comes as Wall Street looks forward to two economic releases ahead of the next Federal Reserve meeting later this month. The talks will begin on Tuesday with the release of the Consumer Price Index (CPI). Economists expect inflation to rise 6% over the past year on a headline basis, while calls for 5.5% on a “core” basis.
Then on Wednesday, the Commerce Department will release print retail sales for February, revealing how much was spent in stores, online and at restaurants. Meanwhile, February’s producer-price index, which measures what suppliers are charging businesses, will be out on the same day.
Investors remained glued to the latest headlines on the collapse of SVB Financial Group (SIVB) and the implications for the banking sector.
Bank sentiment continued to slide as the KBW Bank Index (^BKX) fell nearly 12% in premarket trading on Tuesday morning. But large-cap index members including Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC) and Citigroup (C) traded higher.
Other regional bank stocks, including First Republic Bank (FRC), were up 20% on Tuesday morning after hitting record lows on Monday. PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL), Zions Bancorporation (ZION), Region Financial (RF) all rallied at the open on Tuesday.
The question remains who will be the claimant to scoop up SIVB’s remaining assets after the FDIC takeover. The FDIC was expecting to sell the bank’s assets on Sunday, but instead created the bank to store SVB’s deposits and announced that depositors would be made whole.
Meanwhile, according to the US market intelligence team at JP Morgan, markets are likely to “wrestle” with the Fed’s path as it has to weigh “financial stability” versus “inflation risks”.
So far, market participants have sharply shifted their expectations on the Fed’s next move. data from cme group Shows that more than 75% of traders are expecting a 25-basis-point-rate hike at the Fed’s March meeting, while nearly 25% expected rates unchanged, a dramatic turnaround from last week.
In other single-stock moves, KeyCorp (KEY) advanced more than 15% on Tuesday after declining in the previous trading session. Shares of Credit Suisse Group AG (CS) declined in premarket trading, while Charles Schwab (SCHW) advanced.
Shares of GitLab (GTLB) plunged more than 30% after the company reported a weak revenue forecast for its fiscal first quarter and year that missed analysts’ expectations.
On the earnings front, FedEx (FDX), Adobe (ADBE), Dollar General (DG), and Lennar (LEN) will report quarterly results this week.
Dani Romero is a reporter for Yahoo Finance. follow him on twitter @daniromerotv
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