**Futures Grind Higher Ahead Of Fed Hike Amid Continued Regional Bank Jitters, Oil Exten**
Futures Grind Higher Ahead Of Fed Hike Amid Continued Regional Bank Jitters, Oil Exten
S&P 500 futures are marginally higher on the day despite renewed pre-market weakness from US regional banks and a continued plunge in crude, which sent WTI futures lower by more than 3% on the day and below $70 per barrel on demand worries as the global economy slows. Contracts on the S&P 500 edged 0.1% higher while those on the Nasdaq 100 gained 0.2% by 7:30 a.m. ET, bouncing from yesterday’s losses ahead of the Fed decision. Treasury yields are lower, as traders seek out havens, while the Bloomberg dollar index weakened as traders eye recession risks alongside a potential pause in interest rate hikes. Meanwhile, most metals, including gold, decline slightly.
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In premarket trading, regional banking stocks including PacWest Bancorp and Western Alliance Bancorp tumbled in early trading, dropping as much as 12% while Western Alliance Bancorp (WAL US) fell 7.8%. before recovering most losses ahead of a Fed rate hike that will only make the deposit outflow from small banks worse. Meanwhile, AMD shares fell as much as 6.3% in premarket trading, after the chipmaker gave a tepid forecast for the current quarter as it wades through a severe PC slowdown. Analysts highlighted mixed results for the quarter, but noted that its server and PC businesses should rebound in the second half of the year. Here are some other notable premarket movers:
- Starbucks shares slid as much as 5% in US premarket trading after the coffee chain operator left guidance for the fiscal year 2023 unchanged. The move disappointed analysts, who called it a conservative stance given the strong second quarter and sales beat, and said it suggests growth will weaken in the second half of the year.
- Ford declined in postmarket trading after the company reiterated its full-year forecast despite strong first-quarter results, and flagged headwinds including economic uncertainty around the globe and higher industrywide customer incentives.
- Amcor shares dropped as much as 8.3% in US premarket trading, set to hit their lowest level since June 2020, after the packaging company cuts its adjusted EPS forecast for the full year, with analysts flagging weakness in volumes. Amcor’s shares also declined 9.5% in Sydney trading.
- Chegg (rose as much as 9.5% in premarket trading, as the online educational services company attempts to recoup some losses after posting its biggest intra-day drop on Tuesday.
- Match Group gained in extended trading, after the online dating company reported its first-quarter results and gave an outlook. While the revenue forecast is below expectations, analysts note strength in the company’s Tinder business.
- Unisys shares jumped 12% in extended trading on Tuesday, after the IT services company reported first-quarter results that were stronger than expected.
- Paycom Software shares gained in extended trading after the human-capital-management software company reported first-quarter results that beat expectations and raised its full-year forecast. It also introduced a dividend.
As we previewed previously (https://www.zerohedge.com/markets/fomc-preview-feds-final-hike-and-what-comes-next), the Fed is expected to deliver a 25 basis-point interest-rate increase **and signal a pause in its aggressive tightening campaign.** Watchers anticipate the central bank will stop raising rates as tighter lending conditions and signs of a slowing economy suggest inflation will cool more meaningfully in the months ahead. Fed-dated OIS currently **prices in around 23bp of rate hike premium for the meeting,** little change vs Tuesday close. Investors will assess impact of current banking sector jitters on future monetary policy, though with inflation stubbornly elevated, Powell is expected to stop short of assuring markets that a pause is a done deal — or that rate cuts are imminent
The US stock rally, supported by better-than-feared earnings and hopes for a less hawkish Fed, lost steam this week amid weak economic data and concerns about the banking sector. The selloff pushed the VIX Index toward 18 after the volatility gauge spent most of April near a 16 handle, while the VIX1D doubled yesterday from 10 to 20.
**“When it comes to thinking about the potential for further hikes from here, I do think the Fed really wants to keep the door open specifically given the fact that the economy has been quite resilient,”** said Madison Faller, global strategist at JPMorgan Private Bank. But “whether the last hike is today or even in June, we’re nearing the end of the Fed tightening cycle.”
In Europe, stocks are higher as they l…