Nasdaq, S&P Futures Plunge As Credit Suisse Crisis Deepens, Bringing Banks Back In Spotlight

The euphoria over Tuesday’s inflation numbers has apparently given way to skepticism, with index futures retreating sharply early Wednesday. Traders get to digest another set of key economic data points to make their conclusions about Fed’s potential March move.

Cues From Tuesday’s Trading:

Stocks rallied out of the gates on Tuesday as an in-line February print and a rebound by beaten-down banking stocks, along with a decline in bond yields, perked up risk appetite.

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The major indices opened notably higher and moved roughly sideways through the morning session. Stocks trimmed their gains in the afternoon, with the 30-stock blue chip Dow Industrial Average even dipping briefly below the unchanged line. A late-hour buying surge helped the averages move back up and they closed notably higher for the session.

Tech and financials led the way higher on a day when the buying was broad-based, with energy stocks finding themselves amid gains despite the pullback in oil prices.

Analyst Color:

Optimists among analysts see stocks going higher from here. Carson Group’s Ryan Detrick shared a graphic of the average 20-year historical performance, which suggests the market bottom in the middle of March.

Over the past two decades, stocks have bottomed around the middle of March. pic.twitter.com/4o4QaUsfid

— Ryan Detrick, CMT (@RyanDetrick) March 15, 2023

Extrapolating the inflation data to the fed decision, LPL Financial’s chief economist Jeffrey Roach said even amid current banking scares, the Fed will still prioritize price stability over growth and likely hike rates by 0.25% at the upcoming meeting.

He expects inflation to improve in the latter half of this year and investors to be interested in taking on more market exposure in portfolios.

Futures Today

In premarket trading on Wednesday, the SPDR S&P 500 ETF Trust (NYSE:SPY) fell 1.70% to $385.07 and the Invesco QQQ Trust (NASDAQ:QQQ) moved down 1,39% to $293.23, according to Benzinga Pro data.

Upcoming Economic Data:

The Mortgage Bankers Association is scheduled to release its weekly mortgage applications volume data at 7 a.m. EST. The metric increased 7.4% week-over-week in the week ended March 3, following three weeks of declines. The increase came despite the 30-year mortgage rate climbing to the highest since Nov. 2022.

A trio of reports are due at 8:30 a.m. EST The Commerce Department will release its retail sales report, which is expected to show a 0.3% drop in February following a 3% increase in January.

The Bureau of Labor Statistics will release its February producer price inflation report. The month-over-month increase in wholesale prices is expected at 0.3%, slower than January’s 0.7% increase. The annual pace is also expected to slow from 6% to 5.4%. Core PPI is expected to rise 0.4% month-over-month versus January’s 0.5% growth and the annual rate may have slowed from 5.4% to 5.2%.

The New York Federal Reserve is set to release the results of the Empire manufacturing survey for March. The headline manufacturing index is expected to show a steeper contraction, likely dropping from -5.80 to -8.

The Commerce Department will also release its business sales and inventories report at 10 a.m. EST.

The National Association of Home Builders' housing market index for March is due at 10 a.m. EST. Economists, on average, expect a dip in the index from 42 in February to 40 in March.

The Energy Information Administration will release the petroleum inventory report for the week that ended March 10 at 10:30 a.m. EST.

Stocks In Focus:

• Smartsheet Inc. (NYSE:SMAR) advanced over 11% in premarket trading in reaction to its quarterly results.
• First Republic Bank (NYSE:FRC) rose about 3.5%.
• Lennar Corporation (NYSE:LEN) gained over 3% following the release of its quarterly results.
• Children’s Place Inc. (NASDAQ:PLCE), Adobe Systems Inc. (NASDAQ:ADBE), UiPath Inc. (NASDAQ:PATH), Five Below (NASDAQ:FIVE), Groupon Inc. (NASDAQ:GRPN) and PagerDuty Inc. (NYSE:PD) are among the notable companies reporting earnings on Wednesday.

Top Analysts’ Call

• Meta Platforms Inc. (NASDAQ:META): Oppenheimer reiterates Outperform and raises price target from $235 to $260.
• Charles Schwab Corp. (NYSE:SCHW): Credit Suisse upgrades from Neutral to Outperform and lowers price target from $81.50 to $67.50.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures, which shed a massive 4.64% on Tuesday, were seen rebounding. A barrel of WTI-grade crude oil fetched $71.58, up 0.39% on Wednesday.

The 10-year Treasury yield trended down 0.074 percentage points at 3.56%.

Asian stocks rebounded on Wednesday, tracking the positive close on Wall Street overnight, while the Indian and Indonesian markets bucked the uptrend.

Key economic data released by China showed that economic conditions remain mixed post the reopening, with February retail sales and fixed asset investment in the first two months of the year exceeding expectations. On the other hand, industrial production growth, though accelerating in February, missed expectations.

Meanwhile, the European markets got off to a rocky start, declining sharply by late morning trading, amid renewed selling in the financial space due to continuing negative headlines on Credit Suisse AG (NYSE:CS). The Swiss bank's largest investor Saudi National Bank reportedly said it won't extend assistance to the beleaguered bank.

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