Futures on the Dow Jones Prior to the CPI Inflation Report, the banking crisis escalates; In Focus: GitLab, Tesla, and Schwab

As the banking crisis continues to worsen, with two significant bank failures in recent days, SVB Financial (SIVB) and Signature Bank (SBNY), Dow Jones futures were higher prior to Tuesday’s opening. Tesla shares rose after the company increased hiring at its Gigafactory in Texas, while Schwab stock plunged 11% on Monday due to growing concerns about liquidity. Additionally, GitLab fell 36% behind on earnings.

Financial Crisis Even after reversing some losses, the SPDR S&P Regional Banking ETF (KRE) plunged more than 12 percent on Monday. This is on top of the loss of 16% it suffered last week.

First Republic (FRC), a regional bank, plunged nearly 62%. KeyCorp (KEY) lost 27.3 percent. Additionally, Western Alliance (WAL) fell by 47%.

Fears that the largest U.S. brokerage will have to sell some of its bond holdings to cover deposit withdrawals sent Charles Schwab (SCHW) plunging. Schwab stock’s drop at its most terrible point on the day would be the biggest rate decline on record (in view of information that returns to Sept. 23, 1987), as indicated by Dow Jones.

Bank of America (BAC), JPMorgan Chase (JPM), and Wells Fargo (WFC) all suffered losses of 5.8%, 1.8%, and 7.1%, respectively, as a result of the selling.

Earnings, CPI Inflation Report On the economic front, the consumer price index will be the focus on Tuesday. The Consumer Price Index (CPI) is expected to rise by 0.4% overall and exclude food and energy. As a result, the headline CPI inflation rate would decrease to 6% from 6.1% in January, and the core inflation rate would decrease to 5.5 percent from 5.6 percent.

As the failure of three banks raises concerns about the financial sector’s overall stress, Wall Street suddenly sees a good chance that the Federal Reserve will stop raising interest rates at its meeting next week.

Just a week after Fed Chair Jerome Powell indicated that policymakers were prepared to reaccelerate rate hikes from February’s quarter-point pace at the meeting next week, half-point moves are no longer an option.

A sudden doubt about the strength of the economy is being indicated by a sharp fall in Treasury yields at the moment. Markets are betting that the Fed will cut rates soon, even if it does not pause next week.

On the profit front, GitLab (GTLB) overturned 36% in broadened exchange after the organization’s more vulnerable than-anticipated income direction.

This week, earnings continue to trickle out at the season’s end. Among them are Foundation Sports and Outside (ASO), Adobe (ADBE), Dollar General (DG), FedEx (FDX), Five Underneath (FIVE) and Lennar (LEN).

Today’s Stock Market: On Monday, the S&P 500 and the Dow Jones Industrial Average both lost 0.15 percent. In a day of volatile trading, the Nasdaq composite, which is dominated by technology, gained 0.45%.

Tesla (TSLA), a major manufacturer of electric vehicles, traded up 0.6% on Monday. In today’s stock market action, Apple (AAPL) gained 1.3% and Microsoft (MSFT) gained 2.1% among Dow Jones stocks.

In the current stock market correction, the social media giant Meta Platforms (META), Palo Alto Networks (PANW), New Relic (NEWR), and Dow Jones stocks Nike (NKE) and Salesforce (CRM) are among the most important stocks to keep an eye on.

IBD Leaderboard’s watchlist stock is Palo Alto. Recently, New Relic was an IBD Stock of the Day. Additionally, Nike was mentioned in the Stocks Near A Buy Zone column this week.

Today’s Dow Jones Futures: Oil Prices and Treasury Yields Before the opening bell on Tuesday, futures on the Dow Jones and S&P 500 rose 0.5 percent and 0.6 percent, respectively. Nasdaq 100 futures rose 0.65 percent versus fair value. Keep in mind that overnight movements in Dow Jones futures and other markets may not result in actual trading during the following regular stock market session.

Monday saw the yield on the 10-year U.S. Treasury drop to 3.51 percent as bonds rose sharply as a result of safe haven trading following the collapse of SVB. Oil costs auctions off Monday after Friday’s short bob. Under $75 a barrel, West Texas Intermediate futures lost nearly 3 percent.

With the stock market trending back into a “market in correction” following sharp losses in recent sessions, now is an important time to read IBD’s The Big Picture column on what to do in the new stock market correction.

“IBD changed its market outlook to ‘uptrend under pressure’ Thursday,” said the Big Picture column on Friday. Also, after Friday’s auction we’ve cut our standpoint further, to ‘showcase in rectification.’ Investors must therefore shift to defensive trading, such as taking profits and shorting losses, and refrain from purchasing shares.

(For additional stock ideas, see IBD Stock Lists like the IBD 50 and Stocks Near A Buy Zone.)

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