Market Snapshot: U.S. stock futures rise helped by tech stocks and calmer mood in banking sector


U.S. stock index futures were higher Wednesday morning, helped by a rally in China’s technology stocks, slipping Treasury yields, and a calmer mood in the banking sector.

How are stock-index futures trading
  • S&P 500 futures ES00 added 32 points, or 0.8%, to 4034
  • Dow Jones Industrial Average futures YM00 rose 207 points, or 0.6%, to 32795
  • Nasdaq 100 futures NQ00 climbed 109 points, or 0.9%, to 12842

On Tuesday, the Dow Jones Industrial Average DJIA fell 38 points, or 0.12%, to 32394, the S&P 500 SPX declined 6 points, or 0.16%, to 3971, and the Nasdaq Composite COMP dropped 53 points, or 0.45%, to 11716.

What’s driving markets

Appetite for risk was evident on Wednesday as investors appeared ever more relaxed about the health of the bank sector and the prospects for interest rates.

Strength in China-focused technology stocks was also helping the mood after traders took news of entrepreneur Jack Ma’s re-emergence and Alibaba’s BABA restructuring as a sign of Beijing easing its crackdown on the sector.

“Investor sentiment improves as price action in bank stocks point at waning stress,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. “The S&P500 – which benefited from falling yields due to the Silicon Valley Bank (SVB) collapse – is now sitting above the 200-day moving average.”

“But a move above the 4000-4200 range will likely be challenging unless the next earnings season comes with a positive surprise. Therefore, we could see gains in the S&P 500 rapidly fade if the U.S. yields trend higher with the waning bank stress. But maybe not today!” Ozkardeskaya added.

The 2-year Treasury yield BX:TMUBMUSD02Y, which is particularly sensitive to monetary policy, was trading around 4.06% on Wednesday.

It was above 5% three weeks ago but plunged below 3.6% last Friday when the market feared banking sector turmoil would hit economic activity and encourage the Federal Reserve to trim interest rates more quickly that previously thought.

The CBOE VIX index VIX, a gauge of expected equity market volatility, has dropped below its long run average of 20, a sign that traders are much calmer than of late. Mid-month the VIX popped up to 30 on a couple of occasions.

Tom Lee, head of research at Fundstrat, noted that VIX futures were now back in contango, a more normal structure where longer-term contracts are priced higher.

“This normalization of spread is often a sign investors see the worst of the crisis behind,” said Lee.

“That is generally a constructive sign and is certainly counter to the general gloom of investors post-SVB failure. This ultimately becomes an important point. If investors are gloomy and expect a financial crisis to follow, but this doesn’t happen, this means sentiment and positioning will be key. In many ways, this could be the setup now,” Lee added.

U.S. economic updates set for release on Wednesday include February pending home sales, due at 10 a.m. Eastern.

Companies in focus
  • Lululemon Athletica Inc. LULU’s stock vaulted more than 16% in premarket trading Wednesday after the clothing retailer reported quarterly results that topped analyst revenue and earnings estimates, and offered strong full-year revenue guidance.
  • Lucid Group Inc. LCID shares went up 2% Wednesday after the electric-vehicle maker disclosed Tuesday that it plans to lay off roughly 1,300 employees.
  • Micron Technology Inc. MU stock went up 3.3% Wednesday after the company reported its largest quarterly loss on record due to an inventory write-down of more than $1.4 billion on Tuesday, but executives suggested the memory market may be reaching a bottom.
  • Shares of Minnesota-based Stratasys Ltd. SSYS  shot up 13% in premarket trading Wednesday, after Israel-based Nano Dimension Ltd. NNDM said it increased its bid to buy the fellow 3D printer maker to $19.55 a share.

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