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Dow futures soar, Oil continues to slide, Community and regional banks rally for FDIC backup, Treasury willing to take action to back bank deposits, Fed expected to hike rates again, Amazon to lay off 9000 workers, and more financial news.
Efforts in the United States and Europe to stabilize the banking system pushed stock futures higher on Tuesday, Yahoo Finance reported.
S&P 500 futures advanced 42.49 points or +108%, while the Dow Jones soared 328.27 points or +1.02%, and the NASDAQ climbed 121.5 points or +1.04% as of 6:34 AM EDT.
Treasuries were up on Tuesday with the benchmark US 10-Year Treasury up +0.106 to yield 3.583%, while the 2-Year Treasury climbed +0.251 to yield 4.175% as of 9:36 AM EDT.
In oil futures, WTI was up +1.05% and training at $68.54 per barrel, while Brent crude was up +0.98% and trading at $74.51 a barrel as of 8:27 AM CDT.
Last week, with oil prices at their worst week since the start of the year, as well as the collapse of two big US banks and continued banking woes, Goldman Sachs revised its oil price forecast for the rest of 2023. They now expect the international benchmark of Brent crude to rise only to $94 a barrel for the rest of 2023 and peak at $97 a barrel in 2024, oil price.com reported.
Mid-sized regional banks and their community banks around the US banded together in calling on the Federal Deposit Insurance Corporation (FDIC) to insure all bank deposits to prevent bank runs by customers, such as those that toppled Silicon Valley Bank and Signature Bank, going beyond the current cap of $250,000 per depositor, FOXBusiness reported.
The treasury has signaled regulators don’t plan to backstop uninsured deposits at banks that aren’t granted systemic risk exceptions. This lack of a guarantee of exceptions is prompting some customers as smaller banks to withdraw their funds and move them to larger banks that are considered “too big to fail.”
Treasury Secretary Janet Yellen said Tuesday the government is willing to take further action to guarantee that bank deposits are safe, CNBC reported.
“The steps we took were not focused on aiding specific banks or classes of banks,” Yellen said in prepared remarks. “Our intervention was necessary to protect the broader U.S. banking system.”
“And similar actions could be warranted if smaller institutions suffer deposit runs that pose the risk of contagion,” Yellen added.
Analysts are expecting that the Federal Reserve will likely approve and hike interest rates by one-quarter of a percentage point at this week’s policy meeting, CNBC reports. The Fed has already hiked its benchmark rate eight times over the last year. Another rate hike will affect credit card interest, auto loan rates, and other borrowing. Rates on new or refinanced mortgages, however, are tied to Treasury yields and the economy.
Amazon said it plans to lay off 9000 additional employees in the coming weeks, according to a memo sent to staff on Monday by CEO Andy Jassy, CNBC reported. The job cuts follow an earlier round of layoffs that stretched from November into January in which more than 18,000 employees were let go. The latest cuts are expected to impact Amazon’s cloud computing, advertising, human resources, and Twitch units.
