Wall Street Futures Gain as First Citizens Bank to Buy Silicon Valley Bank, Amid Ongoing Banking Crisis
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Stock futures saw gains on Monday as Wall Street concluded a winning week, and investors kept a close eye on the latest updates from the banking industry. First Citizens Bank has agreed to purchase Silicon Valley Bank, as confirmed by the US Federal Deposit Insurance Corporation overnight. Dow Jones Industrial Average futures rose by 0.4%, adding 138 points, while S&P 500 futures increased by 0.5%, and Nasdaq-100 futures were up 0.4%. Despite volatility due to the Federal Reserve’s recent interest rate hike and the ongoing bank crisis, the Nasdaq Composite rose by 1.7%, with the S&P 500 and Dow increasing by 1.4% and 1.2%, respectively.
The Federal Reserve announced a quarter percentage point interest rate hike last week, which was in line with Wall Street’s expectations, but hinted that there could be an end to interest rate increases on the horizon. Over the course of the week, investors remained concerned about the health of the US banking system, particularly focusing on regional financial institutions like First Republic and PacWest. Deposits outflow from small banks to industry giants, such as JPMorgan Chase and Wells Fargo, slowed down in recent days, according to a report by CNBC.
Investors sold off US-listed shares of Deutsche Bank, which fell by 5.5% for the week, as its credit default swaps surged. The news has reignited concerns about the health of the European banking system, which started with UBS’ acquisition of Credit Suisse earlier this month. Despite the concerns, Fed Chair Jerome Powell and Treasury Secretary Janet Yellen have reassured investors that the US banking system remains stable and supported.
In the coming week, investors will continue to monitor the banking sector for signs of potential weakness. They will also pay attention to the Dallas Fed meeting survey on Monday and the post-bell commentary on monetary policy from Fed Gov. Philip Jefferson.
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First-Citizens Bank & Trust Company, Raleigh, NC, to Assume All Deposits and Loans of Silicon Valley Bridge Bank, N.A., From the FDIC. www.fdic.gov. Published March 26, 2023. Accessed March 27, 2023. https://www.fdic.gov/news/press-releases/2023/pr23023.html
Cox J. Fed hikes rates by a quarter percentage point, indicates increases are near an end. CNBC. Published March 22, 2023. Accessed March 27, 2023. https://www.cnbc.com/2023/03/22/fed-rate-hike-decision-march-2023.html
Son H. Deposit drain from smaller banks into financial giants like JPMorgan Chase has slowed, sources say. CNBC. Published March 25, 2023. Accessed March 27, 2023. https://www.cnbc.com/2023/03/25/banking-crisis-deposit-drain-from-small-banks-into-jpm-wfc-c-slowed.html