Regional Banks and Interest Rate Concerns
Major U.S. stock indexes experienced a drop of over 1% on Tuesday, as regional bank shares tumbled due to renewed fears over the financial system. Investors are also trying to determine how long the Fed may need to hike interest rates. On Wednesday, regional lenders like PacWest Bancorp and Western Alliance Bank saw extended losses in premarket trading.
Fed's Expected Interest Rate Hike and Inflation
While the Fed is widely expected to deliver a 25-basis point interest rate hike, investor focus will be on cues for further hikes, considering inflation remains above the U.S. central bank's 2% target level. Major global central banks have been aggressively hiking interest rates to tackle sticky inflation.
U.S. Labor Market and Services Sector Data
ADP National Employment's report revealed that U.S. private employers increased hiring in April, but there were signs of a slowing labor market due to higher interest rates. Surveys on U.S. services sector activity in April are also due after the market opens.
Senate Republicans Push for Debt-Ceiling Package
Top U.S. Senate Republicans urged President Joe Biden to accept their party's debt-ceiling package or make a counter-offer, while a leading Democrat said the Senate might try to advance a "clean" debt-ceiling hike next week.
Premarket Stock Movements
Dow e-minis, S&P 500 e-minis, and Nasdaq 100 e-minis were up 0.13%, 0.23%, and 0.23%, respectively, at 8:27 a.m. ET. Analysts expect S&P 500 companies' quarterly earnings to decline 1.4% from a year earlier.
Notable Earnings and Stock Movements
Advanced Micro Devices' stock slumped due to weak PC market forecasts, while Intel Corp shares rose. Eli Lilly gained as its experimental Alzheimer's drug showed promising results, while rival Biogen Inc fell. Estee Lauder's stock slid as the company forecasted a bigger drop in full-year sales and profit, and Kraft Heinz Co gained after raising its full-year profit forecast. CVS Health Corp's shares dropped after trimming its annual profit forecast.