Dow futures dive over 400 points as Credit Suisse woes reignite bank sector angst, with retail sales data ahead
Credit Suisse #CreditSuisse
MARKET SNAPSHOT
U.S. stock futures were sliding on Wednesday as fresh concerns over the health of Credit Suisse sparked renewed banking sector anxiety, while U.S. wholesale prices declined in February, hinting at easing U.S. inflation, and retail sales also fell for the month.
How are stock-index futures trading
On Tuesday, the Dow Jones Industrial Average rose 336 points, or 1.06%, to 32155, the S&P 500 increased 64 points, or 1.65%, to 3919, and the Nasdaq Composite gained 239 points, or 2.14%, to 11428.
What’s driving markets
Major stock indexes extended losses after data shows that U.S. wholesale prices dropped 0.1% in February. Economists polled by the Wall Street Journal forecasted a rise of 0.3%.
See: Wholesale prices decline, PPI shows, and hint at easing U.S. inflation
The core producer price index, which excludes volatile food, energy and trade prices, went up 0.2% in February.
U.S. retail sales fell 0.4% in February, in line with the forecasts of economists polled by the Wall Street Journal.
Consumer price data released on Tuesday showed inflation running in February at three times the Federal Reserve’s 2% target.
Markets expect the Fed to raise interest rates by 25 basis points to a range of 4.7%% to 5.0% after its meeting on March 22nd. Just two days ago traders were betting the Fed may leave rates unchanged in a week’s time in order to salve stresses in the banking sector.
Meanwhile, Bloomberg reported Wednesday that the biggest shareholder of Credit Suisse had ruled out investing any more funds in the beleaguered Swiss lender.
The news sparked a 21% plunge in Credit Suisse shares to below two euros for the first time and triggered a broad sell-off in European bank stocks. Shares of U.S. regional banks, such as Zions and Pacific West were also under pressure. U.S.-listed shares of Credit Suisse were down a similar amount.
‘’The banking rout has taken on another ominous twist…as fears rise to the surface about the robustness of sector with the shadow of the SVB collapse still looming large. With the U.S. banking sector downgraded to negative by Moody’s nervousness is super-high and that’s spilt over into a hot mess in Europe,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.
Sharp movements in government yields pushed the ICE BofAML MOVE Index, a gauge of implied Treasury volatility, to a near 14-year high on Tuesday. A rising MOVE index has tended of late to pressure equities because the uncertainty in bonds makes it more difficult to value stocks.
However, the CBOE VIX index a measure of expected S&P 500 volatility, was trading back down around 24 before the Credit Suisse concerns flared up, having spiked to 30 earlier in the week.
Other U.S. economic updates set for release on Wednesday include January business inventories and a homebuilders survey for March, both at 10 a.m.
Companies in focus