Wall St eyes higher open ahead of inflation data as bank fears fade

FILE PHOTO: Raindrops hang on a sign for Wall Street outside the New York Stock Exchange in New York. REUTERS/Mike Segar/File Photo

U.S. stocks were set to open higher on Thursday as fears of a banking crisis eased, while investor focus turned to key consumer spending data for cues on the Federal Reserve's policy path.

The banking turmoil, which started earlier this month with the collapse of two regional U.S. lenders, had sparked concerns about a broader financial crisis and led to a dramatic shift in monetary policy expectations from the Fed.

Investors await the February reading of personal consumption expenditures (PCE) price index, the Fed's preferred inflation gauge, due on Friday. January figures showed a sharp acceleration in consumer spending.

"The data we are starting to see is looking less rosy and even though inflation is falling painfully slowly, it is moving in the right direction," said Stuart Cole, head macro economist at brokerage Equiti Capital.

"This is increasingly starting to point to the Fed being close to halting its policy of raising rates."

Data on Thursday showed jobless claims last week rose more than expected from the week before indicating a cooling labor market, while a separate set of data showed fourth-quarter GDP growth was slightly lower at 2.6% compared with earlier estimates of 2.7%.

Traders' bets are now equally split between a pause and a 25-basis-point rate hike by the Fed in May, according to CME Group's Fedwatch tool.

The KBW regional banking index has gained 1% so far this week while the S&P 500 banks index that houses major lenders has jumped nearly 5%, as fears of a bank contagion recede amid a lack of fresh triggers within the sector.

Investor sentiment also got a boost from upbeat outlooks by Micron Technology and other companies on Wednesday that allayed concerns about the health of the U.S. economy and powered gains in Wall Street's main indexes.

Major tech and growth names such as Microsoft, Tesla and Amazon.com, which were among the biggest boosts to equities in the previous session, rose between 0.8% and 1.2% before the opening bell.

Investors will also parse comments from Boston Fed President Susan Collins, Minneapolis Fed President Neel Kashkari and Richmond President Thomas Barkin later in the day for clues on the central bank's monetary policy plans following the banking crisis.

Despite the turbulence in the banking sector, both the S&P 500 and the Nadsaq are headed for quarterly gains, with the latter on course for its best quarter since the end of 2020.

At 8:38 a.m. ET, Dow e-minis were up 193 points, or 0.59%, S&P 500 e-minis were up 24.75 points, or 0.61%, and Nasdaq 100 e-minis were up 88.5 points, or 0.68%.

Among other stocks, Faraday Future Intelligent Electric Inc jumped 11.5% premarket after the company said it has started production of its first luxury electric car after a months-long delay.

Streaming platform Roku Inc gained 3.4% on plans to cut about 200 jobs while Kohl's Corp climbed 5.2% after its chief executive officer bought shares in the company.

Charles Schwab Corp fell 1.1% after Morgan Stanley downgraded the investment bank's stock to "equal weight" from "overweight". - Reuters

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