US stock futures fell early in trading on Friday morning as markets ended a bumpy week following the Federal Reserve’s interest rate decision on Wednesday and further pressure in the banking sector.
The S&P 500 (^GSPC) fell about 0.4% at the open, while the Dow Jones Industrial Average (^DJI) lost 160 points, or 0.5%. The tech-heavy Nasdaq Composite (^IXIC) also fell, dropping about 0.3%.
WTI crude oil (CL=F) fell about 3% in early trading to $68 a barrel, near the lowest level in nearly two years. Brent crude (BZ=F) also fell 2.6% to just under $74 a barrel.
The oil pressure comes after Energy Secretary Jennifer Granholm told lawmakers Thursday that replenishing the country’s Strategic Petroleum Reserve (SPR) could take several years and that it will be “difficult” to take advantage of the current slump in oil prices .
US Treasury yields also fell. The benchmark yield on 10-year Treasuries fell by 10 basis points to almost 3.3%.
On Wednesday, the Fed raised rates by 25 basis points, pushing the Fed Funds rate range to 4.75%-5%, the highest since October 2007, alongside suggestions that its aggressive campaign to curb inflation was winding down.
“The Committee expects that some additional policy firming may be necessary to implement monetary policy restrictive enough to bring inflation down to 2% over time,” the Fed said in its policy statement, using the language for “ continued interest rate hikes” in interest rates.
Stocks ended Thursday’s volatile trading session higher as investors processed the Fed’s latest move.
“Powell stuck with the Fed’s narrative that there is still a path to a soft landing or inflation returning without pushing the economy into recession,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note Wednesday. “However, that path has narrowed due to the pressure on the banking system.”
Banking sentiment slumped early Friday as investor concerns about financial stability continued to mount following the stunning collapse of Silicon Valley Bank, which sent waves across the financial system.
Regional banking stocks, including First Republic Bank (FRC), PacWest Bancorp (PACW), Western Alliance Bancorporation (WAL) and Regions Financial (RF), all traded lower to start the trading day.
Major banking stocks also fell with Bank of America (BAC), JPMorgan Chase (JPM), Wells Fargo (WFC), Citigroup (C) and Goldman Sachs (GS) all falling lower at market open.
Shares of European banking operators Deutsche Bank (DB) and UBS (UBS) fell more than 7% and 4% respectively as euro banks continue to feel the aftermath of Credit Suisse’s demise.
According to Reuters, Deutsche Bank’s credit default swaps, a form of insurance against default, have risen to a four-year high, adding to heightened concerns about stability abroad.
Block (SQ) fell another 2% in early trading on Friday, following a 15% drop on Thursday, as Wall Street continued to sift through a new piece of short-seller research from Hindenburg.
Hindenburg Research filed fraud allegations against the company, which was founded and led by billionaire Jack Dorsey. In response, Block said it planned to work with the SEC to “investigate legal action against Hindenburg Research for the factually inaccurate and misleading report they shared today about our Cash App business.”
“We had hoped that Block’s response/refutation would be more detailed and believe that ‘examining legal action’ is unlikely to be enough to address investor concerns,” Citi analyst Peter Christiansen wrote in response to the Hindenburg report. report, following shareholder sentiment.
Coinbase (COIN) fell another 1.5% after falling 14% on Thursday following the company’s disclosure, it received a Wells Notice from the SEC, warning companies of impending regulatory action.
Netflix (NFLX), which topped the S&P 500 with an increase of more than 9% on Thursday, saw shares settle in early trading on Friday, rising about 2%.
Activision Blizzard (ATVI) climbed 6.7% to open, its highest since January 2022, after European Union regulators said on Friday it was closing the scope of the investigation into the $75 billion video game developer’s planned acquisition by Microsoft downsized.
Alexandra is a Senior Reporter at Yahoo Finance. Follow her on Twitter @alliecanal8193 and email her at alexandra.canal@yahoofinance.com
Click here for the latest stock market news and in-depth analysis, including stock-moving events
Read the latest financial and business news from Yahoo Finance
Leave a Reply