As Bank Fears Ease, Wall Street Looks To The Fed For Direction

The major Wall Street indices are set to open higher on Tuesday as investors awaited the outcome of the Federal Reserve's monetary policy meeting at the end of the week in the wake of the Credit Suisse rescue, which calmed investor nerves about a bigger banking crisis.

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After the Fed finishes its two-day meeting on Wednesday, traders are now generally expecting that interest rates will rise 25 basis points, half of the rise predicted before the banking crisis triggered by the collapse earlier this month of Silicon Valley Bank and Signature Bank.

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As of now, despite the fact that the state has taken control over Credit Suisse by UBS in addition to the fact that central banks have taken measures in order to boost liquidity, analysts still believe that the crisis has not been fully averted.

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“Although it is a relief that banks so far have been rescued from their depositors, I still believe that this turmoil is far from over." Peter Cardillo, the chief market economist at Spartan Capital Securities, says the situation is far from over.

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“Taking a pause and then revisiting it in May would be the best thing that the Fed could do, as the last thing that they would want to do is to cause havoc in the markets... Without doing so, they might as well just take a pause."

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In prepared remarks on Tuesday, U.S. Treasury Secretary Janet Yellen said that in light of the strong action taken by regulators, the American banking system has stabilized. Depositors should be protected from contagion if smaller institutions suffer bank runs.

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First Republic Bank, which hit a record low on Monday when it hit a record low of 23.2%, climbed 21.3% in premarket trade after falling as low as 21.3% on Tuesday.

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The Wall Street Journal reported on Monday that CEO Jamie Dimon of JPMorgan Chase & Co, along with other big banks, is in talks about a possible investment into First Republic Bank as part of efforts to stabilize the lender.

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In comparison, PacWest Bancorp rose 6.7% and Western Alliance Bancorp rose 7.1%, respectively, over the previous quarter.

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Several major U.S. banks also rose between 1.7% and 2.4% before the bell, including JPMorgan Chase, Citigroup, and Bank of America.

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The yield on the two-year note, which is the best indicator of interest rate expectations, was last at 4.12% for the second straight day, rising for a second consecutive day.

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According to Morgan Stanley, Meta Platforms Inc has been upgraded to "overweight" from "equal weight" on the hot heels of reports that the stock has gained 2.6%, outperforming most growth companies.

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After the opening bell on Monday, investors will begin analyzing the existing home sales figures for February to get a sense of how the economy will perform over the coming months.

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During the early morning trading hours of 8:14 a.m. ET on Monday, Dow e-minis were up 73.2 points, or 0.89%, S&P 500 e-minis were up 39 points, or 0.83%, and Nasdaq 100 e-minis were up 89 points, or 0.65%.

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Google suspended Pinduoduo's Play app after malware issues caused the Chinese e-commerce platform's stock price to plummet nearly 1%.