Traders work on the floor of the New York Stock Exchange (NYSE) on February 14, 2023 in New York City.
Spencer Platt | Getty Images
Stock futures rose slightly Monday, putting Wall Street on track to build on last week’s gains.
Futures tied to the Dow Jones Industrial Average gained 92 points, or 0.3%. S&P 500 futures were up 0.3%, while Nasdaq-100 futures advanced 0.1%.
Regional banks rose broadly, with the SPDR S&P Regional Banking ETF (KRE) climbing more than 2% in the premarket. First Republic was the best-performing stock in the fund, surging more than 24%. PacWest also gained more than 9%.
The moves come after Wall Street capped off a winning week despite volatility related to the Federal Reserve’s latest interest rate hike and the ongoing bank crisis. The Nasdaq Composite led the major indexes upward with a 1.7% advance. The S&P 500 finished the week up 1.4%, while the Dow added 1.2%.
The central bank announced a quarter percentage point interest rate hike — which was largely in line with Wall Street expectations — while hinting that an end to interest rate increases could be on the horizon.
“All told, this was about as dovish a rate increase as you can get. On the whole, that seemed to leave markets feeling if not good, then at least not bad,” said Brad McMillan, chief investment officer for Commonwealth Financial Network. “Although markets were okay with the Fed, it was the second thing — the ongoing turmoil in the banking system — that mattered even more.”
The health of the U.S. banking system also weighed on investors over the course of the week, with a particular focus on First Republic, PacWest and other regional financial institutions. CNBC reported over the weekend that the deposit outflow from small banks to industry giants like JPMorgan Chase and Wells Fargo has slowed in recent days.
Meanwhile, Bloomberg reported that U.S. authorities were considering expanding an emergency lending program for banks, which could give First Republic more time to shore up its liquidity. First Republic ended last week down 46.3% as investors contemplated if the plan from a group of banks to deposit $30 billion would be enough to bolster its balance sheet.
First Citizens Bank also agreed to buy large parts of Silicon Valley Bank, the U.S. Federal Deposit Insurance Corporation said overnight. The deal includes the purchase of approximately $72 billion of SVB assets at a discount of $16.5 billion, but around $90 billion in securities and other assets will remain “in receivership for disposition by the FDIC.”
Fed Chair Jerome Powell and Treasury Secretary Janet Yellen aimed to assure investors that the U.S. banking system remained stable and supported in commentary delivered over the course of the week.