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Wall Street's main indexes in reverse with DJI leading declines
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U.S. Mar NAHB index > estimate
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Euro STOXX 600 index slides >2%
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Dollar, gold up ~1%; crude down ~4%, bitcoin up ~1%
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U.S. 10-Year Treasury yield tumbles to ~3.44%
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WALL ST SLAMMED BY BANK SECTOR, ECONOMIC WORRIES (1013 EDT/1413 GMT) Wall Street's three major averages are off sharply early on Wednesday, after a brief reprieve on Tuesday, with the spotlight currently on European banks as well as global economic concerns.
While U.S. banks are also weak, in Europe, shares of Credit Suisse tumbled to a record low after the bank's largest investor said it could not provide the Swiss bank with more financial assistance.
The collapse of three U.S. banks in recent days, including
hotshot Silicon Valley Bank, had sent jitters through U.S. bank
stocks and global markets as investors worried about what
financial sector weakness means for the economy.
Specifically referencing the financial sector's problems," Torsten Slok, chief economist at Apollo Global Management, said he now expects a "hard landing," which typically implies a big recession, compared with his previous expectation for "no landing," which implies no recession at all. Slock's changing view is driven by tighter credit conditions. With small banks accounting for 30% of all loans in the U.S. economy, and regional and community banks now likely to have to "spend several quarters repairing their balance sheets," he sees "much tighter lending standards for firms and households even if the Fed would start cutting rates later this year." As a result of all this, Slok does not see the Fed raising interest rates next week.
And the economist said: "We have likely seen the peak in both short and long rates during this cycle. Nearly all of the 11 S&P 500 industry sectors are in the red with energy falling most as oil prices are being crushed with financial stocks following close behind. All the S&P 500's banks are in the red with regional First Republic getting hit hardest. Even the biggest banks are flagging with JPMorgan down 4% and Goldman Sachs down 5%. The SPXBK hit its lowest level since Nov. 2020. The STOXX Europe 600 bank index is down more than 6% after touching its lowest level since early January. Here is your early trading snapshot taken at 1012 EDT:
(Sinéad Carew)
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U.S. STOCK FUTURES RED ON EUROPEAN BANK STRESS; U.S. DATA BELOW ESTIMATES (0900 EDT/1300 GMT) U.S. equity index futures are sharply lower in the wake of the release of the latest data on producer prices, retail sales, and a shift in concerns to European banks. The February PPI on a month-over-month and year-over-year basis came in below estimates. Ex-food/energy month-over-month was below the estimate, while the year-over-year reading was in-line with the estimate. March NY Fed manufacturing came in much weaker than expected:
According to the CME's FedWatch Tool, the probability of a 25 basis point rate hike at the March 21-22 FOMC meeting is now 56% from around 50% just before the numbers were released. There is now around a 44% chance that the FOMC will leave rates unchanged from around 50% prior to the data coming out. CME e-mini S&P 500 futures are down around 1.9%. The futures were sliding around 1.7% just before the data release.
All S&P 500 sector SPDR ETFs are lower in premarket trade. Financials are showing the biggest loss, off around 3.3%. This as the focus of the concern over banks has now shifted to Europe. The STOXX 600 Banks index is down around 7%. U.S. listed shares of Credit Suisse are slated to open down more than 25%. A check of premarket action in U.S. banking ETFs shows the SPDR S&P Bank ETF is losing more than 4%, while the SPDR S&P Regional Banking ETF is off about 5%. Of note, NYMEX crude futures are trading below $70.00, hitting their lowest level since December 21, 2021. Here is a premarket snapshot just shortly before 0900 EDT:
(Terence Gabriel)
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(Terence Gabriel is a Reuters market analyst. The views
expressed are his own)
