US stock futures fell on Friday morning as markets ended a flat week following the Federal Reserve’s interest rate decision on Wednesday and further pressure on the banking sector.
Futures linked to the S&P 500 (^GSPC) fell about 0.8%, while futures on the Dow Jones Industrial Average (^DJI) lost 335 points, or 1%. Contracts on the technology-heavy Nasdaq Composite ( ^IXIC ) also declined, falling roughly 0.5%.
WTI crude oil ( CL=F ) fell about 4% in pre-market trade to $67 a barrel, near its lowest level in nearly two years. Brent crude oil (BZ=F) also fell 4% to less than $73 a barrel.
The oil pressure comes after Energy Secretary Jennifer Granholm told lawmakers on Thursday that it could take years to replenish the nation’s Strategic Petroleum Reserve (SPR) and that it would be “difficult” to take advantage of the current slump in oil prices.
On Wednesday, the central bank raised rates by 25 basis points, bringing the range for the fed funds rate to 4.75%-5%, the highest since October 2007, and hinting at its aggressive rate hike campaign to tame inflation.
“The Committee expects some additional policy stabilization to be appropriate to achieve a stance of monetary policy that is sufficiently accommodative to return inflation to 2% over time,” the central bank said in its statement. Insurance StatementEliminating the language for “ongoing rate hikes” in interest rates.
Stocks ended a volatile trading session on Thursday as investors digested the central bank’s latest move.
“Powell is sticking to the Fed’s narrative that there is still a path to getting the economy to target without tipping the economy into recession or reversing inflation,” Ryan Sweet, chief U.S. economist at Oxford Economics, wrote in a note Wednesday. “However, that path has narrowed due to pressure on the banking system.”
Bank sentiment dipped early on Friday as investor concerns surrounding financial stability grew following the shocking collapse of a Silicon Valley bank, which had a ripple effect across the entire financial system.
Regional Bank stocks including First Republic Bank ( FRC ), PacWest Bancorp ( PACW ), Western Alliance Bancorporation ( WAL ), Regions Financial ( RF ), and Zions Bancorporation ( ZION ) all traded lower.
Bank of America ( PAC ) , JP Morgan Chase ( JPM ) , Wells Fargo ( WFC ) , Citigroup ( C ) , and Goldman Sachs ( GS ) also fell in premarket trading on Friday.
Shares of European banking operators Deutsche Bank ( DB ) and UBS ( UBS ) fell more than 10% and 6%, respectively, as euro banks continued to feel the aftereffects. The collapse of Credit Suisse.
According to ReutersDeutsche Bank’s credit default swaps, a form of insurance against default, rose to a four-year high, adding to more stability concerns overseas.
After plunging 15% on Thursday, Black ( SQ ) fell another 4% in premarket trade on Friday, as Wall Street followed fresh short-seller research from Hindenburg.
Hindenburg charged with research Fraud against a company founded and led by billionaire Jack Dorsey. In response, Black said he “intends to work with the SEC to take legal action against Hindenburg Research for the false and misleading statements they shared today about our Cash of Business.”
“We hoped Block’s response/denial would be more detailed and that ‘exploring legal action’ would not be enough to address investor concerns,” Citi analyst Peter Christiansen wrote in reaction to the Hindenburg report, echoing the sentiment of shareholders.
Coinbase ( COIN ) fell another 2% after plunging 14% on Thursday after it received a wells notice from the SEC, warning companies of pending action from the regulator.
Netflix ( NFLX ), which led the S&P 500 on Thursday, saw shares jump more than 9% in early premarket trading on Friday.
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