US stock futures fell early Friday morning as markets close a bumpy week after Wednesday’s Federal Reserve interest rate decision and further pressure in the banking sector.
The S&P 500 (^GSPC) fell about 0.4% at the open while the Dow Jones Industrial Average (^DJI) lost 160 points or 0.5%. The tech-heavy Nasdaq Composite (^IXIC) was also down, falling about 0.3%.
WTI Crude Oil (CL=F) fell about 3% to $68 a barrel in early trade, nearing its lowest level in nearly two years. Brent crude (BZ=F) also fell 2.6% to just under $74 a barrel.
The pressure in oil comes after Energy Secretary Jennifer Granholm told lawmakers on Thursday that replenishing the country’s Strategic Petroleum Reserve (SPR) could take several years and that it will be “difficult” to take advantage of the current drop in oil prices.
US Treasury yields also fell. The benchmark 10-year government bond yield fell 10 basis points to trade near 3.3%.
On Wednesday, the Fed hiked interest rates by 25 basis points, bringing the range for key interest rates to 4.75% to 5%, the highest since October 2007, while also hinting that its aggressive campaign of interest rate hikes to contain inflation is winding down.
“The Committee understands that additional monetary tightening may be appropriate to achieve monetary policy sufficiently restrictive to bring inflation back to 2% over time,” the Fed said in its policy statement and omitted the wording “persistent”. rate hikes” of interest rates.
Shares ended Thursday’s volatile trading session higher as investors digested the Fed’s latest move.
“Powell stuck to the Fed’s narrative that there was still a way for inflation to soft-land or return to target without pushing the economy into recession,” wrote Ryan Sweet, chief US economist at Oxford Economics, on Wednesday in a note. “However, this path has narrowed due to the pressure on the banking system.”
The story goes on
Shares ended Thursday’s volatile trading session higher as investors digested the Fed’s latest move
Bank sentiment plummeted early Friday as investor concerns over financial stability continued to mount following the stunning collapse of Silicon Valley Bank, which had a domino effect across the financial system.
Regional bank stocks including First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL) and Regions Financial (RF) all traded lower to start the trading day.
Big bank stocks also slid, with Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Goldman Sachs (GS) all falling lower on the market open.
Shares in European bankers Deutsche Bank (DB) and UBS (UBS) fell more than 7% and 4%, respectively, as Eurobanks continue to feel the aftermath of the collapse of Credit Suisse.
According to Portal, Deutsche Bank’s credit default swaps, a form of default insurance, jumped to a four-year high, contributing to greater stability concerns abroad.
Block (SQ) dropped another 2% in early trade on Friday after falling 15% on Thursday as Wall Street continued to sift through a fresh piece of short-seller research from Hindenburg.
Hindenburg Research raised allegations of fraud against the company, founded and run by billionaire Jack Dorsey. In response, Block said it intends to work with the SEC to “review legal action against Hindenburg Research over the factually inaccurate and misleading report they shared today about our cash app business.”
“We had hoped that Block’s response/rebuttal would be more detailed and believe that ‘taking legal action’ is unlikely to be enough to address investor concerns,” wrote Citi analyst Peter Christiansen in response to the Hindenburg report and thus reflected the mood of the shareholders.
Coinbase (COIN) fell another 1.5% after plummeting 14% Thursday after the company’s announcement, it received a Wells Notice from the SEC warning companies of upcoming regulatory action.
Netflix (NFLX), which topped the S&P 500 on Thursday as the stock rose more than 9%, saw the stock down in early trade on Friday, up about 2%.
Activision Blizzard (ATVI) rose 6.7% at opening, the highest since January 2022, after European Union regulators said on Friday they were expanding the scope of their investigation into the video game developer’s proposed $75 billion acquisition by Microsoft would restrict.
Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at [email protected]
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