Jitters in the banking sector are taking a back seat because Wall Street is sitting on the sidelines of the Fed’s policy meeting. The day before the crucial events is going to be optimistic. Investors dispelled fears, revised forecasts, and again invested their funds in the stock market. Still, investors’ nerves are on edge. So, any aggressive news on the financial sector is able to change market sentiment.

Wall Street indices surged on Monday in light of the news on the rescue of Credit Suisse and amid the joint efforts of central banks to reinforce public trust in the financial sector. Despite earlier pessimism and the turbulent weekend, investors found some relief in the measures by the major central banks and again shifted focus to risky assets. As a result, the benchmark indices opened the week with confidence gains. Remarkably, the Dow Jones recouped losses incurred on Friday and rebounded by 382 points or 1.2%. The Nasdaq climbed by 0.39%. The S&P 500 rose by 0.89% to close at 3,950.
Wall Street indices gained ground in the New York pre-market. Futures on the stock indices grew 0.8-1.2% signaling the optimistic opening. The S&P 500 is expected to trade in the intraday corridor between 3,910 and 4,020.
Yesterday, the S&P 500 snapped a losing streak and recovered by 0.6%. Besides, the regional banking index jumped by 1.5%, having rebounded after sharp losses last week.
The crash of Silicon Valley Bank and Signature Bank sent shock waves across markets in early March. In consequence, shares of banks collapsed and investors stoked fears that the Fed’s aggressive monetary tightening would entail a recession.
On Monday, shares of banks traded mixed. Shares of Credit Suisse listed on US exchanges slumped by 53%. In contrast, shares of USB Group climbed by 3.3%.  
Shares of the US-based First Republic Bank упали sank by 47.1% after S&P Global had downgraded its rank into junk status. Investors got to know reports on extra fundraising despite the rescue deal worth 30 billion dollars.
Shares of New York Community surged by 31.7% after the bank’s division agreed to buy deposits and loans from Signature Bank. PacWest shares closed 10.8% up after the bank stated that it had stemmed deposit withdrawals.
Outside the banking sector, Amazon shares dropped by 1.3% on the next day following the announcement on another 9,000 job cuts.
To sum up, all 11 sectors of the S&P 500 closed in the green and the volatility index went down.
Today futures on the US stock indices extended their rally because investors were inspired about the rescue of Credit Suisse.
Now market participants are betting on a rate hike by 25 basis points in the outcome of the Fed’s meeting. The takeover of Credit Suisse by Swiss rival UBS and moves of major central banks to pump up liquidity eased fears about broad-based contagion of the banking sector. Thus, Wall Street indices regained their footing.
Shares of the rescued regional lenders regained losses in the New York pre-market. Shares of First Republic Bank leapt by 23.6%. Shares of PacWest and Western Alliance rebounded by 6.7% and 4.6% respectively.
Shares of top American banks such as JPMorgan, Citigroup, and the Bank of America rose by 0.7 – 1.4% before the opening bell.
Now the market is riveted to the press conference of Jerome Powell rather than the Fed’s policy decision. Investors will be looking for clues to the revised Fed’s agenda for monetary policy. The regulator has to adjust its policy decision to the vulnerable financial sector while inflation has got stuck way above the target level.
Market fluctuations are a common practice. However, the scale of recent wild moves of various assets alarmed even savvy traders and investors.
Yields of US Treasuries have been growing for a second day straight because investors are taking a breather in the face of a looming bank crisis. Yields of 2-year Treasuries which serve as a barometer of interest rate expectations now stand at 4.04%.
Investors will find clues to the economic health in US existing home sales which are due later today.

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