Wall St set for lower open as bank contagion worries flare up
By Amruta Khandekar and Ankika Biswas
(Reuters) - Wall Street's main indexes were headed for a lower open on Friday as concerns over the banking sector's health sapped the appetite for financial stocks.
Treasury Secretary Janet Yellen said on Thursday that measures will be taken to keep Americans' deposits safe, but that did little to ease investor nerves about a liquidity crisis in the banking sector that could limit lending and tip the economy into a severe recession.
Shares of major U.S. banks such as JPMorgan Chase & Co (NYSE: JPM ), Wells Fargo (NYSE: WFC ) and Bank of America (NYSE: BAC ) dropped between 1% and 2.8% in premarket trade.
Shares of regional lenders First Republic Bank, PacWest Bancorp, Western Alliance Bancorp and Truist Financial Corp fell between 2% and 4.9%.
European banks also came under pressure after a report of a U.S. probe into Credit Suisse (SIX: CSGN ) and UBS further soured the mood. Their U.S.-listed shares were down about 4.6% and 3.4%, respectively.
U.S. shares of Deutsche Bank (ETR: DBKGn ) fell nearly 10% after the bank's credit default swaps rose to a four-year high.
"Although they are trying to reassure markets that they'll be standing by to take action if necessary, what investors are taking this as is the fact that regulators, central bankers and the U.S. government are still concerned about the potential for contagion," said Susannah Streeter, head of money and markets, Hargreaves Lansdown (LON: HRGV ).
Banking crisis concerns were also reflected in bond markets, with U.S. two-year Treasury yields falling sharply to their lowest levels since September on Friday.
Traders' bets have now shifted toward a pause in U.S. rate hikes in May, after the Fed signaled caution about its next move amid the global banking crisis, sparked by the failure of two regional banks.
Data on Friday showed orders for durable goods fell 1% last month against expectations of a 0.6% rise.
S&P Global (NYSE: SPGI )'s survey due later in the day is expected to show a weakening in U.S. manufacturing activity in March, while remarks by Fed's St. Louis president, James Bullard, are also expected after the opening bell.
At 8:32 a.m. ET, Dow e-minis were down 345 points, or 1.07%, S&P 500 e-minis were down 36.5 points, or 0.92%, and Nasdaq 100 e-minis were down 76 points, or 0.59%.
Among major movers, Block Inc fell 2.4% in premarket trading and looked set to extend losses from Thursday when Hindenburg Research disclosed short positions in the payments firm.
Activision Blizzard (NASDAQ: ATVI ) jumped 5.5% after the UK competition regulator dropped some competition concerns in the Microsoft-Activision deal.
Crypto stocks like Coinbase (NASDAQ: COIN ) Global, Marathon Digital Holdings and Riot Platforms dropped between 2.2% and 3.4% after cryptocurrency exchange Binance paused deposits and withdrawals on its platform due to issues affecting its spot trading.
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