US Stocks Poised For Mixed Start As Banking Crisis Continue To Play Out: Focus Shifts To Data, ECB Decision

Indecision is writ all over the face of the market despite Wednesday's late-session recovery attempt. Shares of Credit Suisse Group AG CS, which dragged the broader market lower in the previous session, are rebounding strongly after the bank announced mitigatory measures and an assuaging comment from its biggest lender.

Cues From Wednesday’s Trading:

Stocks had an extremely volatile session on Wednesday as the Credit Suisse headline reignited worries concerning the banking system. 

The major indices opened notably lower and moved roughly sideways till late afternoon trading, weighed down by renewed selling in financial stocks. The averages cut their losses in late afternoon trading after reports suggested Switzerland’s central bank will extend a helping hand to Credit Suisse, calming the nerves of traders.

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The tech-heavy Nasdaq Composite Index closed barely in positive territory, while the Dow Industrials and the S&P finished moderately lower.

Energy stocks slumped the most amid oil's plunge, and financial, material and industrial stocks also came under selling pressure. Gains in consumer-staple and communication services stocks helped to offset some of the negativity.

Analyst Color:

Rising risks of contagion in the banking system and falling retail spending, as reflected in the February retail sales report could be spelling trouble, according to LPL chief economist Jeffrey Roach.

He sees the set-up for a looming recession. “The trajectory of consumer spending weakened in February and now with volatile short-term borrowing costs, the economy may soon tip into recession,” Roach said.

The economist's base-case scenario calls for a Fed rate hike next week but he raised the prospect of turmoil in short-term dollar borrowing forcing the Fed to pause.

Futures Today

In premarket trading on Thursday, the SPDR S&P 500 ETF Trust SPY fell 0.13%, to $388.76, while the Invesco QQQ Trust QQQ moved up 0.16%, to $299.40, according to Benzinga Pro data.

Upcoming Economic Data:

The Commerce Department is scheduled to release its housing starts report for February at 8:30 EST. Economists expect housing starts to improve slightly from 1.309 million units in January to 1.310 million units in February. Despite the increase, housing starts are expected to remain way off their mid-2022 highs of 1.805 million units.

Building permits, an indicator of future housing activity, may have also risen from 1.339 million units to 1.340 million units.

The Bureau of Labor Statistics is scheduled to release a duo of reports at 8:30 a.m. EST. The number of individuals claiming unemployment benefits is expected to have slowed down from 211,000 in the week ended March 3 to 205,000 in the week ended March 10.

BLS’ export and import prices report for February is expected to show a 0.1% month-over-month decline in export prices and a steeper 0.2% drop in import prices. This compared to a 0.8% increase and a 0.2% drop, respectively, in January.

The Philadephia Federal Reserve will release the results of its manufacturing survey, also at 8:30 a.m. EST. The headline diffusion index of business activity is expected to remain in negative terrain in March, although improving from -24.3 in February to -15.6 in March.

The Treasury will auction 4-week and 8-week bills at 11 a.m. EST.

Stocks In Focus:

• Credit Suisse shares rose over 6% in premarket trading after its biggest investor — Saudi National Bank — termed Wednesday’s sell-off as “unwarranted.” The company also said it will draw into its credit facility with the Swiss National Bank.
• Adobe Systems Inc. ADBE rose close to 6% in reaction to its quarterly results.
• Dollar General Corp. DG, ), Groupon Inc. GRPN, Children’s Place Inc. PLCE, Jabil Inc. JBL, Signet Jewelers Limited SIG, Williams-Sonoma Inc. WSM and FedEx Corp. FDX are among the notable companies reporting earnings on Thursday.

Commodities, Bonds, Other Global Equity Markets:

Crude oil futures, which fell over 5% to $67.61 a barrel on Wednesday, were rebounding. A barrel of crude oil fetched $68.32, up 1.05% on Wednesday. The black gold plunged to its lowest since late-2021 in the previous session amid recession fears.

The 10-year Treasury yield rose 0.008 percentage points to 3.502% after declining on Wednesday.

The major Asian markets fell across the board, led by the Hang Seng and Chinese markets. The Indian and New Zealand markets bucked the downtrend, with the former finding modest strength following its recent steep declines, while the latter advanced on weak GDP data that raised hopes for an accommodatory monetary policy from the central bank.

European stocks started Thursday’s session firmer after the previous session’s steep losses. Credit Suisse’s rebound on the news of intervention by the Swiss central bank also served to mitigate some of the negativity. The averages have trimmed their gains by late morning trading as traders look ahead to the outcome of the European Central Bank’s monetary policy meeting.

ECB is widely expected to raise interest rates by 50 basis points despite the surrounding uncertainty.

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