Stock futures add to gains as banking crisis concerns ease; Treasury said it will consider extending US bank deposit guarantees; Nvidia CEO Jensen Huang prepares for a keynote on AI technology; Tesla rises after Moody’s upgrades rating to ‘junk status’ and Nike Q3 earnings on deck as rival Adidas reels from Kanye West split.
Five things to know before the market opens on Tuesday, March 21:
1. — Stock futures add to gains as banking crisis concerns ease
US stock futures rose on Tuesday as investors sought to take advantage of Monday’s strong rally amid hopes that the bailout of troubled lender Credit Suisse and a stabilized domestic banking sector will ease investor concerns about a broader financial market crisis.
Investors are also focused on the Federal Reserve’s response to the crisis, which was triggered by the collapse of Silicon Valley Bank on March 10, just as policy officials entered a so-called “blackout” period for comment. public before their two-day meeting. policy meetings, which begin later this morning in Washington.
CME Group’s FedWatch still suggests a firm 83.4% chance that Chairman Jerome Powell orchestrates a small 25 basis point rate hike tomorrow, with most bets pointing to a short-term pause, or even a rate cut, such as the impact. of the banking crisis spreads to the real economy.
Still, Monday’s bailout of Credit Suisse, which was sold to crosstown rival UBS Group at the behest of Swiss regulators and government officials for around $3.25bn, has steadied market jitters in the last 24 hours, with shares of regional US banks – apart from the First Republic (FRC) – Get a free report— posting strong gains on Monday, along with bullish moves in premarket trading, amid reports of improvements in US Treasury deposit guarantees.
First Republic, meanwhile, remains mired in top risk amid reports of a possible capital raise and further credit downgrades following its $30bn deposit increase last week. The group’s shares, which plunged 47.1% yesterday, were up 22.33% in premarket trading at $14.90 apiece.
However, risk sentiment indicators appear to have improved as benchmark 2-year Treasury yields rose more than 4% in overnight trade and were last seen at 4.053%, while yields on 10-year bonds were set at 3.536%.
Market volatility indicators also eased, with the CBOE Group’s VIX Index falling 7.7% in the overnight session to 23.54 points. Meanwhile, the US Dollar Index was down 0.03% against a basket of six global currency pairs to trade at 103.247.
Futures contracts linked to the S&P 500 indicate an opening bell gain of 24 points, while those linked to the Dow Jones industrial average had expected an advance of 220 points. The technology-focused Nasdaq is looking for a more modest gain of 38 points amid rising Treasury yields.
In overseas markets, Europe’s Stoxx 600 rose 1.35% in early Frankfurt trading, driven in part by strong earnings from the banking sector, while Britain’s FTSE 100 rose 1.35% in London. .
Overnight in Asia, the MSCI ex-Japan index of the entire region was down 1.36% at close of trading, while the Nikkei 225 closed for the annual Vernal Equinox holiday.
2. — The Treasury Department said it will consider extending US bank deposit guarantees.
The US Treasury Department is looking at ways to extend deposit guarantees through the Federal Deposit Insurance Corporation in case the country’s banking crisis deepens in the coming weeks.
Bloomberg reported Tuesday that the Treasury is studying options that would allow a temporary guarantee on all US deposits, possibly leveraging the FX Stabilization Fund, without the need for congressional approval.
The FDIC currently provides deposit protection of up to $250,000 per account, although the Treasury increased that limit to protect clients of failed Silicon Valley Bank and it can be lifted if necessary to protect an institution that the Treasury deems systemically important.
The Coalition of Midsize Banks of America, a lobbying group, is seeking a general deposit guarantee that lasts at least two years.
Democratic Senator Elizabeth Warren, an outspoken critic of US banking regulations, is calling on Congress to lift the limit on FDIC-insured deposits, potentially up to $10 million, to really stem the crisis in the regional banking sector. .
“Small businesses should be able to count on getting their money to pay the payroll, to pay the utility bills,” Warren told CBS’s ‘Face The Nation’ on Sunday. “Nonprofits need to be able to do that. These are not people who can investigate the safety and soundness of their individual banks. That’s the job regulators are supposed to do.”
3. — Nvidia CEO Jensen Huang prepares for a keynote speech on AI technology
nvidia (NVDA) – Get a free reportStocks rose in premarket trading ahead of a keynote address on AI and the broader tech and semiconductor space later this morning from CEO Jensen Huang
Nvidia will host its annual GTC Developers Conference in San Jose later Tuesday, with Huang speaking on how AI technologies are “affecting all industries and our daily lives.”
Last month, Huang said AI had reached a “tipping point” and touted the potential of a $600 billion market for the world’s fastest-developing technology by unveiling a new AI “supercomputer,” known such as Nvidia DGX, which can allow business customers to access AI-related technology through cloud computing providers such as Microsoft (MSFT) – Get a free reportand oracle (ORCL) – Get a free report.
“There is no question that this is, in every way, a new computing age,” Huang told investors on February 22. “And I think this ($600 billion market estimate) really is even more achievable today and sooner than before.”
Nvidia shares rose 0.38% in premarket trading to indicate an opening bell price of $260.00 each. a move that would extend the year-to-date gain to around 78%.
4. — Tesla rises after Moody’s upgrades to ‘junk status’
tesla (TSLA) – Get a free reportThe shares rose in premarket trading after the automaker upgraded its Moody’s Investors Service credit rating, raising its overall assessment to investment grade.
Moody’s, which raised Tesla’s rating by one notch to Baa3, the lowest investment-grade rating, with senior loan officer Rene Lipsch citing the group’s “prudent financial policy and management’s operating record,” adding that it expects Tesla to remain “one of the leading manufacturers of battery electric vehicles with an expanding global presence and very high profitability.”
Tesla’s chief financial officer, Zach Kirkhorn, said the group would halve production costs for electric vehicles in the coming years as it aims to significantly increase capital spending to meet its stated goal of producing 20 million. of cars per year by 2030 during an investor day presentation earlier this month. in austin
Tesla shares rose 1.18% in premarket trading to indicate an opening price of $185.41 apiece.
5. — Nike Q3 gains in sight as rival Adidas reels from Kanye West split
Nike (OF) – Get a free reportShares rose in premarket trading ahead of the sportswear group’s third-quarter earnings after the closing bell.
Nike is expected to post a bottom line of 55 cents a share for the three months ending in February, down 36.7% from the same period last year, even as revenue rises 5.5% to $11. .47 billion while continuing to discount a wide range of items. in an effort to turn around excess inventory built up during the second half of last year.
Nike is also likely to regain lost market share from its main global rival, Adidas, following the split of the German group of rapper and artist Kanye West following a series of anti-Semitic comments made through their verified social media accounts.
Earlier this month, Adidas said overall sales are likely to decline by a high single-digit percentage rate this year, compared with a consensus forecast of a 4% increase, as key markets in China continue to grow. struggling and consumer purchasing power waning along with higher inflation rates in the US and Europe.
Shares of Nike rose 0.6% in premarket trading to indicate an opening price of $121.90 each.
