07:30: Retail in the spotlight
Wall Street is expected to open lower, giving back Tuesday’s strong gains on lingering fears of banking contagion following the collapse of Silicon Valley Bank (SVP), with investors now eyeing US retail sales for further direction.
Futures for the Dow Jones Industrial Average fell 1.7% in Wednesday’s premarket trade, while futures for the broader S&P 500 also fell 1.7% and contracts for the Nasdaq-100 fell 1.5%.
Sentiment took a hit when Credit Suisse’s shares were suspended after falling to a record low after its biggest investor, Saudi National Bank, said it could no longer provide the Swiss bank with additional financial credit, according to a Reuters report.
“Sentiment appears to have dissipated, with big moves in fixed income markets and banking stocks again, likely on a further fall in Credit Suisse shares and rise in CDS,” commented Neil Wilson, market analyst at Markets.com. “European stock markets led by bank stocks and US futures are falling. If CS were to run into serious existential trouble, we’re in for a whole other world of pain.”
The Nasdaq Composite led Tuesday’s gains, rising 2.1% to 11,428, buoyed by news that Meta Platforms plans to cut another 10,000 jobs this year as part of the tech giant’s cost-cutting drive. February inflation data that were broadly in line with expectations helped push the DJIA up 1.1% to 32,155, while the S&P 500 rose 1.7% to 3,919. The small-cap Russell 2000 index rose 1.9% to 1 777.
“Wall Street posted solid gains on Tuesday, not only helped by the post-SVB relief recovery, but also thanks to some slightly softer than expected inflation data,” commented James Hughes, market analyst at Scope Markets.
“This makes life a little more difficult for the policy hawks at the Federal Reserve, and even if the market continues to price in a 25 basis point hike next week, the accompanying press conference will be under close scrutiny for clues about what happens next.”
Today, the focus shifts to US retail sales in February as the next key input to monitor, noted TickMill Group market analyst James Harte.
“As with the CPI, retail sales rose higher in January, adding to the sense of hawkishness at the time. However, looking at today’s data, the market expects overall retail sales to fall 0.3%, down from 3% previously, with core retail sales expected to fall 0.1%, down from 2.3% previously,” Harte said. “In fact , in light of yesterday’s weaker US CPI reading, market prices now reflect a roughly 20% chance that the Fed will keep interest rates on hold this month.”
