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First Citizens to buy SVB assets; shares jump
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Regional, large bank stocks jump
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Tesla gains as Barclays forecasts upbeat deliveries
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Futures up: Dow 0.63%, S&P 0.62%, Nasdaq 0.34%
(Updates prices, adds details)
By Amruta Khandekar and Ankika Biswas
March 27 (Reuters) - Wall Street's main indexes were set
to open higher on Monday after a buyout deal for the deposits
and loans of the failed Silicon Valley Bank calmed nerves about
stress in the banking sector.
First Citizens BancShares Inc said on Monday it
will acquire parts of Silicon Valley Bank , which
collapsed earlier this month in the largest bank failure since
the 2008 financial crisis, unleashing fears about a liquidity
crunch in the sector.
Shares of First Citizens jumped 40% in premarket trade,
while First Republic Bank surged 25.7% after a report
said U.S. authorities were considering more support for banks,
which could give the embattled regional lender more time to
shore up its balance sheet.
Regional banks Western Alliance Bancorp and PacWest
Bancorp also climbed 5.9% and 9.8%, respectively.
Shares of major U.S. banks JPMorgan Chase & Co ,
Citigroup and Bank of America advanced between
1.5% and 2.1%.
European bank shares also rebounded from declines last week
when a sharp jump in Deutsche Bank's credit default
swaps, a type of insurance for bondholders, had exacerbated
worries about the health of banks in the region.
"SVB was a victim of growing too fast and unwisely investing
too much of its deposit base in longer-dated treasuries. The
takeover has provided some reassurance that beneath this huge
mistake, SVB was basically sound," said Stuart Cole, head macro
economist at Equiti Capital.
The absence of any new banking failures over the weekend has
also helped sentiment, Cole added.
U.S. Treasury yields rose on Monday as fears about the
banking sector eased, with the yield on the two-year note last
at 3.9%.
Traders have largely priced in that the Federal Reserve will
pause rate hikes in May amid lingering worries about the banking
sector stress potentially causing a steep economic downturn.
Still, despite the turbulence in financial markets, in the
past two weeks the benchmark S&P 500 and the tech-heavy
Nasdaq logged their biggest two-week gain since early
February and are on course for a quarterly gain.
Investors are also awaiting a host of economic data this
week, including a consumer confidence reading and an inflation
report that could give more clues about the Fed's monetary
policy path.
Remarks by Fed Board Governor Philip Jefferson, a voting
member of the Federal Open Market Committee (FOMC) this year, on
monetary policy later in the day will also be on the radar.
At 8:20 a.m. ET, Dow e-minis were up 203 points, or
0.63%, S&P 500 e-minis were up 25 points, or 0.62%, and
Nasdaq 100 e-minis were up 43.25 points, or 0.34%.
Among other stocks, shares of Tesla Inc edged 1.7%
higher after Barclays said it expects the electric carmaker's
first-quarter deliveries to beat estimates.
U.S.-listed shares of AstraZeneca Plc gained 1.6%
premarket after the drugmaker's Eplontersen drug showed positive
results in a late-stage trial.
(Reporting by Amruta Khandekar and Ankika Biswas; Editing by
Dhanya Ann Thoppil, Vinay Dwivedi and Savio D'Souza)
