Wall St set to open higher as rate hike pause hopes grow
Published: 03:03 PM,Mar 23,2023 | EDITED : 07:03 PM,Mar 23,2023
The Wall St entrance to the NYSE is seen in New York
Bengaluru:Wall Street was set to open higher on Thursday after the Federal Reserve hinted it was close to pausing interest rate hikes amid a turmoil in the banking sector that threatens to cause a severe economic downturn.
The Federal Reserve on Wednesday raised rates by an expected 25 basis points, but its policy statement no longer said 'ongoing increases' would likely be appropriate, indicating a clear shift in its stance.
The central bank's softer tone relieved markets that have been roiled by concerns about a liquidity crisis in the banking sector since the failure of two U.S. regional lenders earlier this month.
Wall Street's main indexes had closed sharply lower on Wednesday after Fed Chair Jerome Powell said the central bank was still intent on fighting inflation even as he flagged credit issues due to banking troubles could have 'significant' implications for the economy.
'The impression given by Powell has taken away any hopes the market had that we might get some cut in interest rates later this year,' said Stuart Cole, head macro economist at Equiti Capital.
'It seems that the message that the central banks have been giving to date, that returning inflation to target is their number one priority is very much still the message that they're going to deliver despite the banking failures.' Traders' bets are almost equally split between the Fed pausing its rate hikes in May and another 25 bps hike, according to CME Group's Fedwatch tool.
Bank of America and UBS now see the Fed funds rate target peaking at 5-5.25per centin May compared to earlier forecasts of 5.25-5.5per cent.
While U.S. Treasury yields slipped on growing hopes of an end to the Fed's tightening cycle, major growth stocks such as Apple Inc, Microsoft and Amazon.com jumped above 1per centpremarket.
Troubled regional lender First Republic Bank rose 7.9per centafter slumping on Wednesday following Treasury Secretary Janet Yellen's remark that there was no discussion on insuring all bank deposits.
PacWest Bancorp and Western Alliance Bancorp gained 4.4per centand 5.3per centrespectively.
Meanwhile, data showed signs of strength in the labor market, with jobless claims falling to 191,000 last week from the week prior, against expectations that the number would rise to 197,000 At 8:41 a.m. ET, Dow e-minis were up 55 points, or 0.17per cent, S&P 500 e-minis were up 20.25 points, or 0.51per cent, and Nasdaq 100 e-minis were up 120.25 points, or 0.95per cent.
Shares of Block Inc fell 19.7per centpremarket after Hindenburg Research said it held short positions in the Jack Dorsey-led payments firm.
Among other stocks, Nvidia Corp rose 2.5per centafter Needham raised its price target on the chipmaker on likely benefit from near-term data center strength.
Coinbase Global Inc slid 14.4per centafter the U.S. Securities and Exchange Commission (SEC) threatened to sue the crypto exchange over some of its products.
Regeneron Pharmaceuticals Inc jumped 8.2per centon promising results on its blockbuster asthma drug Dupixent from a lung disease trial.
Accenture Plc rose 3.1per centafter the company said it would cut about 2.5per centof its workforce, or 19,000 jobs.__Reuters
The Federal Reserve on Wednesday raised rates by an expected 25 basis points, but its policy statement no longer said 'ongoing increases' would likely be appropriate, indicating a clear shift in its stance.
The central bank's softer tone relieved markets that have been roiled by concerns about a liquidity crisis in the banking sector since the failure of two U.S. regional lenders earlier this month.
Wall Street's main indexes had closed sharply lower on Wednesday after Fed Chair Jerome Powell said the central bank was still intent on fighting inflation even as he flagged credit issues due to banking troubles could have 'significant' implications for the economy.
'The impression given by Powell has taken away any hopes the market had that we might get some cut in interest rates later this year,' said Stuart Cole, head macro economist at Equiti Capital.
'It seems that the message that the central banks have been giving to date, that returning inflation to target is their number one priority is very much still the message that they're going to deliver despite the banking failures.' Traders' bets are almost equally split between the Fed pausing its rate hikes in May and another 25 bps hike, according to CME Group's Fedwatch tool.
Bank of America and UBS now see the Fed funds rate target peaking at 5-5.25per centin May compared to earlier forecasts of 5.25-5.5per cent.
While U.S. Treasury yields slipped on growing hopes of an end to the Fed's tightening cycle, major growth stocks such as Apple Inc, Microsoft and Amazon.com jumped above 1per centpremarket.
Troubled regional lender First Republic Bank rose 7.9per centafter slumping on Wednesday following Treasury Secretary Janet Yellen's remark that there was no discussion on insuring all bank deposits.
PacWest Bancorp and Western Alliance Bancorp gained 4.4per centand 5.3per centrespectively.
Meanwhile, data showed signs of strength in the labor market, with jobless claims falling to 191,000 last week from the week prior, against expectations that the number would rise to 197,000 At 8:41 a.m. ET, Dow e-minis were up 55 points, or 0.17per cent, S&P 500 e-minis were up 20.25 points, or 0.51per cent, and Nasdaq 100 e-minis were up 120.25 points, or 0.95per cent.
Shares of Block Inc fell 19.7per centpremarket after Hindenburg Research said it held short positions in the Jack Dorsey-led payments firm.
Among other stocks, Nvidia Corp rose 2.5per centafter Needham raised its price target on the chipmaker on likely benefit from near-term data center strength.
Coinbase Global Inc slid 14.4per centafter the U.S. Securities and Exchange Commission (SEC) threatened to sue the crypto exchange over some of its products.
Regeneron Pharmaceuticals Inc jumped 8.2per centon promising results on its blockbuster asthma drug Dupixent from a lung disease trial.
Accenture Plc rose 3.1per centafter the company said it would cut about 2.5per centof its workforce, or 19,000 jobs.__Reuters