Five things you need to know before the market opens on Tuesday March 21:
1. -- Stock Futures Add To Gains As Bank Crisis Concerns Ease
U.S. equity futures moved higher Tuesday as investors looked to build on Monday's solid rally amid hopes that the rescue of troubled lender Credit Suisse, and a stabilized domestic banking sector, will quell investor concerns over a broader financial market crisis.
Investors are also focused on the Federal Reserve's response to the crisis, which was triggered by the collapse of Silicon Valley Bank on March 10, just as monetary policy officials entered the so-called 'blackout' period for public comments ahead of their two-day policy meetings, which begins later this morning in Washington.
The CME Group's FedWatch still suggests a firm 83.4% chance that Chairman Jerome Powell will orchestrate a small 25 basis point rate hike tomorrow, with the bulk of bets going forward pointing to a near-term pause, or even a rate cut, as the impact of the banking crisis spills over into the real economy.
Still, the Monday rescue of Credit Suisse, which was sold to its cross-town rival UBS Group at the behest of Swiss regulators and government officials for around $3.25 billion, has steadied market nerves over the past 24 hours, with regional U.S. bank stocks -- apart from First Republic (FRC) -- recording solid Monday advances, along with upside moves in pre-market trading, amid reports of improved deposit guarantees from the U.S. Treasury.
First Republic, meanwhile, remains mired in headline risk amid reports of a potential capital increase and further credit downgrades following its $30 billion deposit boost last week. Shares in the group, which plunged 47.1% yesterday, were marked 22.33% higher in pre-market trading at $14.90 each.
Risk sentiment indicators do appear to have improved, however, with benchmark 2-year Treasury note yields rising past 4% in overnight trading, and last seen at 4.053%, while 10-year note yields were pegged at 3.536%.
Market volatility gauges were also in retreat, with the CBOE Group's VIX index falling 7.7% % in the overnight session to 23.54 points. The U.S. dollar index, meanwhile, was marked 0.03% lower against a basket of six global currency peers and trading at 103.247.
Futures contracts tied to the S&P 500 are indicating a 24 point opening bell gain while those linked to the Dow Jones Industrial Average were looking at a 220 point advance. The tech-focused Nasdaq is looking at more modest 38 point gain amid the bump in Treasury bond yields.
In overseas markets, Europe's Stoxx 600 rose 1.35% in early Frankfurt trading, powered in part by solid gains for the banking sector, while Britain's FTSE 100 was marked 1.35% higher in London.
Overnight in Asia, the region-wide MSCI ex-Japan index was marked 1.36% lower into the close of trading while the Nikkei 225 closed for the annual Vernal Equinox holiday.
2. -- Treasury Said To Mull Expanded U.S. Bank Deposit Guarantees
The U.S. Treasury Department is looking at ways in which it could expand deposit guarantees through the Federal Deposit Insurance Corporation should the country's banking crisis deepen over the coming weeks.
Bloomberg reported Tuesday that the Treasury is studying options that would allow for a temporary guarantee of all U.S. deposits, possibly by leveraging the Exchange Stabilization Fund, without the need for Congressional approval.
At present, the FDIC provides deposit protection up to $250,000 per account, although that limit was increased by the Treasury to protect customers at the failed Silicon Valley Bank and can be lifted if needed to protect an institution the Treasury deems systemically important.
The Mid-Size Bank Coalition of America, a lobby group, is seeking a blanket deposit guarantee that lasts for at least two years.
Democratic Senator Elizabeth Warren, a vocal critic of U.S. banking regulations, is asking Congress to lift the cap on FDIC insured deposits, potentially to as high as $10 million, in order to truly stem the regional banking sector crisis.
"Small businesses need to be able to count on getting their money to make payroll, to pay the utility bills," Warren told CBS's 'Face The Nation' program Sunday. "Nonprofits need to be able to do that. These are not folks who can investigate the safety and soundness of their individual banks. That's the job the regulators are supposed to do."
3. -- Nvidia CEO Jensen Huang Set For Keynote Address On AI Technology
Nvidia (NVDA) shares edged higher in pre-market trading ahead of a keynote address on AI and the broader tech and semiconductor space later this morning from CEO Jensen Huang
Nvidia will host its annual GTC Developer Conference in San Jose later Tuesday, with Huang speaking as to how AI technologies are "affecting every industry - and our everyday lives".
Last month, Huang said AI had reached an "inflection point" and touted the potential of a $600 billion market for the world's fastest-developing technology as he unveiled a new AI "supercomputer", known as Nvidia DGX, that can allow business customers to access AI-related technology through cloud computing providers such as Microsoft (MSFT) and Oracle (ORCL).
"There's no question this is, in every way, a new computing era," Huang told investors on February 22. "And so I think this ($600 billion market estimate) really is even more realizable today and sooner than before."
Nvidia shares were marked 0.38% higher in pre-market trading to indicate an opening bell price of $260.00 each. a move that would extend the stock's year-to-date gain to around 78%.
4. -- Tesla Edges Higher After Moody's Lifts 'Junk Status' Rating
Tesla (TSLA) shares edged higher in pre-market trading after the carmaker a credit rating upgrade from Moody's Investors Service that lifted its overall assessment to investment grade.
Moody's, which lifted Tesla's rating by one notch to Baa3, the lowest investment grade rating, with senior credit officer Rene Lipsch citing the group's "prudent financial policy and management's operational track record", adding it expects Tesla to remain "one of the foremost manufacturers of battery electric vehicles with an expanding global presence and very high profitability."
Tesla CFO Zach Kirkhorn said the group would halve EV production costs over the coming years as it aims to significantly ramp-up capital spending in order to meets its stated goal of production 20 million cars per year by 2030 during an investor day presentation earlier this month in Austin.
Tesla shares were marked 1.18% higher in pre-market trading to indicate an opening bell price of $185.41 each.
5. -- Nike Q3 Earnings On Deck As Rival Adidas Staggers From Kanye West Split
Nike (NKE) shares bumped higher in pre-market trading ahead of the sportswear group's third quarter earnings after the closing bell.
Nike is expected to post a bottom line of 55 cents per share for the three months ending in February, down 36.7% from the same period last year, even as revenues rise 5.5% to $11.47 billion as it continues to discount a broad range of items in an effort to shift excess inventory collected over the second half of last year.
Nike is also likely to collect lost market share from its main global rival, Adidas, following the German group's separation from rapper and artist Kanye West following a series of anti-Semitic comments made through his verified social media accounts.
Earlier this month, Adidas, said overall sales are likely to decline by a high single digit" percentage rate this year, compared to a consensus forecast of a 4% gain, as key markets in China continue to struggle and consumer spending power fades alongside higher inflation rates in the U.S. and Europe.
Nike shares were marked 0.6% higher in pre-market trading to indicate an opening bell price of $121.90 each.
