Market Analysis

The major U.S. index futures are currently pointing to a lower open on Friday, with stocks likely to give back ground after moving sharply higher over the course of the previous session.

Profit taking may contribute to initial weakness on Wall Street, as some traders look to cash in on yesterday’s rally amid lingering concerns about turmoil in the financial sector.

Shares of First Republic Bank (FRC) are showing a significant pullback in pre-market trading, with the bank plunging by 22.6 percent after surging by 10.0 percent on Thursday.

The jump in the previous session came as a group of financial institutions agreed to deposit $30 billion in First Republic in an effort to express confidence in the banking system.

Overall trading activity may be somewhat subdued, however, as traders look ahead to the Federal Reserve’s monetary policy decision next Wednesday.

CME Group’s FedWatch Tool is currently indicating a 26.9 percent chance the Fed will leave rates unchanged and a 73.1 percent chance of a 25 basis point rate hike.

Stocks recovered from early weakness and moved sharply higher over the course of the trading session on Thursday. The major averages all showed strong moves to the upside on the day, with the tech-heavy Nasdaq leading the advance.

While the Nasdaq spiked 283.22 points or 2.5 percent to 11,717.28, closing higher for the fourth straight session, the S&P 500 surged 68.35 points or 1.8 percent to 3,960.28 and the Dow jumped 371.98 points or 1.2 percent to 32,246.55.

Stocks rallied following a report from the Wall Street Journal indicating JPMorgan Chase (JPM), Morgan Stanley (MS) and several other big banks are discussing a potential deal with First Republic Bank (FRC).

People familiar with the matter told the Wall Street Journal the potential deal could include a sizable capital infusion to shore up the beleaguered lender.

First Republic is working on various potential options including a capital raise that could take various forms, the people told the journal.

News that Credit Suisse will borrow up to $54 billion from the Swiss central bank to shore up liquidity and investor confidence also helped ease recent concerns about turmoil in the banking sector.

In U.S. economic news, the Labor Department released a report showing first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended March 11th.

The report said initial jobless claims fell to 192,000, a decrease of 20,000 from the previous week's revised level of 212,000.

Economists had expected jobless claims to slip to 205,000 from the 211,000 originally reported for the previous week.

A separate report released by the Labor Department showed import prices edged slightly lower in the month of February.

The Labor Department said import prices dipped by 0.1 percent in February after falling by a revised 0.4 percent in January.

Economists had expected import prices to slip by 0.2 percent, matching the decrease originally reported for the previous month.

The report also said import prices in February were down by 1.1 percent compared to the same month a year ago, reflecting the first annual decrease since December 2020.

Semiconductor stocks moved sharply higher over the course of the session, driving the Philadelphia Semiconductor Index up by 4.1 percent to its best closing level in a month.

Substantial strength also emerged among software stocks, as reflected by the 3.5 percent surge by the Dow Jones U.S. Software Index.

Banking stocks also showed a significant turnaround over the course of the session, the KBW Bank Index jumping by 2.6 percent after hitting its lowest intraday level in over two years.

Computer hardware, brokerage and networking stocks also saw considerable strength on the day, moving higher along with most of the other major sectors.

Commodity, Currency Markets

Crude oil futures are slipping $0.21 to $68.14 a barrel after climbing $0.74 to $68.35 a barrel on Thursday. Meanwhile, after falling $8.30 to $1,923 an ounce in the previous session, gold futures are jumping $27.10 to $1,950.10 an ounce.

On the currency front, the U.S. dollar is trading at 132.10 yen versus the 136.44 yen it fetched at the close of New York trading on Thursday. Against the euro, the dollar is valued at $1.0618 compared to yesterday’s $1.0610.

Asia

Asian stocks ended broadly higher on Friday as worries about a crisis in the U.S. and European banking sector eased and investors looked forward to a smaller rate hike from the Federal Reserve next week.

Credit Suisse Group received a liquidity lifeline from the Swiss National Bank and big U.S. banks put together a rescue effort for First Republic Bank, easing worries over a possible spreading of risks throughout the financial system.

Chinese shares rose notably, with the benchmark Shanghai Composite Index closing 0.7 percent higher at 3,250.55 on optimism over an economic recovery from the pandemic.

Hong Kong's Hang Seng Index jumped 1.6 percent to 19,518.59, led by technology stocks. Internet search engine Baidu soared 13.7 percent after unveiling an artificial intelligence-powered chatbot "Ernie Bot."

Japanese shares rose sharply, led by banking and electronics stocks. Canon, Mizuho Financial Group and Sony climbed 1-3 percent. Construction firm Taisei Corp. led losses to close 8.1 percent lower.

The Nikkei 225 Index rallied 1.2 percent to 27,333.79, while the broader Topix closed 1.2 percent higher at 1,959.42.

Seoul stocks finished higher as traders priced in a 25-basis point rate hike at next week's Fed meeting. The Kospi advanced 0.8 percent to 2,395.69, led by technology stocks.

Samsung Electronics gained 2.3 percent and SK Hynix surged 6.3 percent. Among those that fell, Samsung SDI, LG Chem and LG Energy Solutions lost 2-4 percent.

Australian markets eked out modest gains, led by energy stocks as oil extended overnight gains following reports that top producers Saudi Arabia and Russia met to discuss ways to enhance market stability. Woodside Energy Group added 2.7 percent and Santos rose 1.6 percent.

The benchmark S&P/ASX 200 Index rose 0.4 percent to 6,994.80 but posted a weekly decline of 2.1 percent, extending declines for a sixth straight week. The broader All Ordinaries Index settled half a percent higher at 7,188.20.

Transit operator Kelsian Group slumped 8.7 percent after announcing its acquisition of a major American bus operator.

Europe

European shares have moved to the downside on Friday as traders digest multi-billion-dollar lifelines for troubled U.S. and European banks

While the French CAC 40 Index has slid by 0.8 percent, the German DAX Index is down by 0.7 percent and the U.K.’s FTSE 100 Index is down by 0.5 percent.

Swiss lender Credit Suisse has moved to the downside in choppy trading after having rallied 19 percent in the previous session.

Meanwhile, Diploma, the U.K. supplier of specialized technical products and services, has jumped after raising gross proceeds of GBP235 million through a placing of 9.3 million shares at 2,525 pence each.

Bodycote, a provider of heat treatment and thermal processing services, has also soared after reporting a jump in full-year profit and revenue.

U.S. Economic Reports

The Federal Reserve is scheduled to release its report on industrial production in the month of February at 9:15 am ET. Industrial production is expected to rise by 0.2 percent in February after coming in unchanged in January.

At 10 am ET, the University of Michigan is due to release its preliminary report on consumer sentiment in the month of March. The consumer sentiment index is expected to be unchanged at 67.0.

The Conference Board is also scheduled to release its report on leading economic indicators in the month of February at 10 am ET. The leading economic index is expected to dip by 0.2 percent in February after falling by 0.3 percent in January.

Stocks In Focus

Shares of FedEx (FDX) are moving sharply higher in pre-market trading after the delivery giant reported better than expected fiscal third quarter earnings and raised its full-year earnings guidance.

Media giant Warner Bros. Discovery (WBD) may also see initial strength after Wells Fargo and Wolfe Research both upgraded their ratings on the company’s stock to Overweight and Outperform, respectively.

Shares of Nvidia (NVDA) may also move to the upside after Morgan Stanley upgraded its rating on the chipmaker’s stock to Overweight from Equal-Weight.