March 30, 2023

Brighton Journal

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US stocks decline – futures with SVB Financial extended, payroll data pending

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Futures down: Dow 0.39%, S&P 0.30%, Nasdaq 0.04%

(Reuters) – U.S. stock index futures fell on Friday as the sell-off in SVB Financial shares extended into pre-market trading, as investors awaited the key jobs report for more clues on the Federal Reserve’s monetary policy path.

Wall Street’s major indices posted huge losses in the previous session after selling shares of startup-focused lending group SVB Financial Group to shore up its balance sheet, sparking fears of jitters in the banking sector, wiping more than $80 billion in value from it. Bank stocks.

SVB shares fell more than 41% in pre-market trading on Friday, after falling more than 60% in the previous session, while JPMorgan Chase & Co, Citigroup and Wells Fargo shares fell between 0.6% and 1.1%.

The three major US indices are heading for weekly losses after hawkish messages from Federal Reserve Chairman Jerome Powell raised fears that the central bank will return to raising interest rates dramatically at its meeting in March after it cut the size of its rate increases a month ago.

Traders’ bets are currently split roughly evenly between the odds of a 25bp and 50bp rate hike at the Fed’s March meeting, with rates peaking at 5.48% in July..

After a sharp rise in jobless claims last week raised hopes that the Federal Reserve will likely soften its policy stance, all eyes are now on the non-farm payrolls data due at 8:30 am ET, which is expected to show slower job growth. America last month, with the unemployment rate remaining at its lowest level in more than five decades.

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The reading is likely to show non-farm payrolls growth of 205,000 jobs in February, less than half of the 517,000 additional jobs added in January. The unemployment rate is expected to remain unchanged at 3.4%, the lowest level since May 1969.

“The strength of January’s jobs data came as a surprise to markets,” Mark Hefell, chief investment officer, UBS Global Wealth Management, said in a note. “While an upward surprise of this magnitude seems unlikely, the February report could still be too strong to be comforting, in the Fed’s view.”

At 5:35 a.m. ET, the Dow e-minis were down 127 points, or 0.39%, the S&P 500 e-minis were down 11.75 points, or 0.3%, and the Nasdaq 100 e-minis were down 4.5 points, or 0.04%.

Among other stocks, Gap Inc fell 6.7% in pre-market trading after the apparel maker posted a bigger-than-expected loss in the fourth quarter and forecast full-year sales that missed Wall Street estimates, pointing to a slowdown in demand.

(Reporting by Amruta Khandekar; Editing by Vinay Dwivedi)