Stock futures were slightly higher in overnight trading Monday following a relief rally by the market on the hope of containing the banking crisis.
The Dow Jones Industrial Average futures gained 30 points. Both futures on the S&P 500 and Nasdaq 100 gained 0.1%.
Blue-chip Dow gained more than 380 points Monday while S&P 500 gained 0.9% This action occurred a day following a
UBS forced Credit Suisse to be taken over by Credit Suisse
The Swiss government engineered the issuance of the. Investors were also pleased to hear this news.
JPMorgan Chase might be your advisor
First Republic Bank in trouble - strategic alternatives
First Republic Bank also sold 47% more during the session. This is in addition to the 10% decline seen so far this month.
Other regional banks have rebounded after suffering large losses over the past week. The
SPDR Regional Banking ETF (KRE)
Monday's gain was 1% after a 14% drop last week. First Citizens, Fifth Third Bancorp, and PacWest were the leaders in the rebound.
"Bank selling seems exhausted" Adam Crisafulli, Vital Knowledge founder, stated in a note that the new deposit problems at a new bank would create additional supply. However, there is very little interest in buying the group, particularly the regionals.
In light of the bank crisis, investors expect the Federal Reserve to tighten at a slower pace. Traders are now pricing in a 77% chance that the Fed will increase the rate by quarter-points when it wraps.
Its two-day policy meeting
FedWatch tool by CME Group
The likelihood of a pause occurs at 23%
Jeffrey Roach, chief economist of LPL Financial, stated that "Risks for contagion are increasing and could push Fed to pause current rate hiking cycle," although this is not the base case. "The Fed will likely signal that they are close to the end of their rate hike campaign, as inflation pressures drop and recession risks increase."
Traders say that the Fed is stuck in a rock-and-hard place.
Victor Masotti, Clear Street's director of repo trading, said that the Federal Reserve is in a difficult place heading into this week’s policy meeting.
Masotti stated that the Fed is "truly stuck between a rock & a hard place" as it tries to manage more than their two mandates, inflation and employment. Consumer banking confidence is also declining.
Wall Street expects a rate increase of 25 basis points, but most Wall Streeters don't think so.
Monday's statement by Goldman Sachs
It expects that the central bank will pause in order to "avoid worsening markets fears of further banking stress."
-- Yun Li
According to Johnston of Cantor Fitzgerald, the recession has not been priced into the markets.
According to Eric Johnston, Cantor Fitzgerald's Eric Johnston, markets have not yet priced in a recession. This could lead to stocks taking a significant leg lower.
The head of equity derivatives, cross asset said that "I believe almost no chance has ever been priced in" and was based on numbers.
Closing Bell: Overtime
" Monday. " on Monday.
He said that the rate market is indicating that a recession is imminent much earlier than investors expect, which could be bad news for equity futures.
Johnston stated that while it is difficult to predict the bottom of any market, now is a good time to sell equities and move into cash or money market funds to get liquidity.
He said, "If we were going to move lower, you want the ability to be agile, to take advantage that equity saleoff."
Johnston is not a fan of cyclicals. He called them one of the "last places to be" in a downturn.