© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 29, 2023. REUTERS/Brendan McDermid
By Amruta Khandekar and Ankika Biswas
(Reuters) – U.S. stocks opened higher on Thursday as fears of a banking crisis eased as investors’ focus turned to key consumer spending data for clues. about the direction of Federal Reserve policy.
The banking turbulence, which began earlier this month with the collapse of two regional US lenders, had raised concerns about a broader financial crisis and led to a dramatic shift in expectations for Federal Reserve monetary policy.
Investors await the February reading of the Personal Consumption Expenditures (PCE) price index, the Fed’s preferred inflation gauge, to be released on Friday. The January figures showed a strong acceleration in consumer spending.
“The data we’re starting to see looks less rosy and while inflation is falling painfully slowly, it’s moving in the right direction,” said Stuart Cole, chief macroeconomist at brokerage Equiti Capital.
“This is starting to signal more and more that the Fed is close to stopping its rate hikes.”
Data on Thursday showed jobless claims last week rose more than expected from the previous week, signaling a cooling job market, while a separate set of data showed fourth-quarter GDP growth it was slightly lower at 2.6% compared to previous estimates of 2.7%.
Traders’ bets are now evenly split between a pause and a 25 basis point rate hike by the Fed in May, according to CME Group’s (NASDAQ:) Fedwatch tool.
The KBW regional banking index has gained 1% so far this week, while the bank index that houses major lenders is up nearly 5% as fears of bank contagion subside amid lack of new triggers within the sector.
Investor sentiment was also boosted by upbeat outlooks for Micron Technology (NASDAQ:) and other companies on Wednesday, allaying concerns about the health of the US economy and boosting gains in major stock indexes. Wall St.
Major tech and growth names like Microsoft (NASDAQ:), Tesla (NASDAQ:) and Amazon.com (NASDAQ:), which were among the biggest lifts for shares in the previous session, rose between 0.8 and 1. .2% before opening. Campaign.
Investors will also scrutinize comments from Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari and Richmond President Thomas Barkin later in the day for clues about plans. of monetary policy of the central bank after the banking crisis.
Despite the turbulence in the banking sector, both the S&P 500 and the Nadsaq are headed for quarterly gains, with the latter on track for its best quarter since the end of 2020.
As of 8:38 a.m. ET, they were up 193 points, or 0.59%, up 24.75 points, or 0.61%, and up 88.5 points, or 0.68%.
Among other stocks, Faraday Future Intelligent Electric Inc jumped 11.5% premarket after the company said it started production of its first luxury electric car after a months-long delay.
streaming platform Year (NASDAQ:) Inc gained 3.4% on plans to cut some 200 jobs, while Kohl’s Corp (NYSE:) rose 5.2% after its chief executive bought shares in the company.
charles schwab (NYSE:) Corp fell 1.1% after Morgan Stanley (NYSE:) downgraded the investment bank’s shares to “equal weight” from “overweight.”
