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Wall Street’s main indexes recorded steep losses in the previous session after startups-focused lender SVB Financial Group’s share sale to shore up its balance sheet unleashed fears of stress in the banking sector, wiping out more than $80 billion in value from bank shares.
Shares of SVB were down more than 41% in premarket trading on Friday, after slumping over 60% in the previous session, while JPMorgan Chase & Co (NYSE:JPM), Citigroup (NYSE:C) and Wells Fargo (NYSE:WFC) fell between 0.6% and 1.1%.
All three major U.S. indexes are headed towards weekly losses after hawkish messages from Fed Chair Jerome Powell stoked fears that the central bank would shift back to a large rate hike at its March meeting after having dialed down the size of its rate increases a month ago.
Traders’ bets currently are split nearly equally between the odds of a 25 bps and a 50 bps rate hike at the Fed’s March meeting, with rates seen peaking at 5.48% in July..
After a sharp rise in jobless claims last week raised hopes of the Fed likely softening its policy stance, all eyes are now on the non-farm payrolls data due at 8:30 am ET, which is expected to show slower U.S. job growth last month, with the unemployment rate staying at a more than five-decade low.
The reading is likely to show nonfarm payrolls grew by 205,000 jobs in February, less than half of the eye-popping 517,000 additions in January. The unemployment rate is forecast to stay unchanged at 3.4%, the lowest since May 1969.
“The strength of the January jobs data came as a surprise to markets,” said Mark Haefele Chief Investment Officer, UBS Global Wealth Management in a note.
“While an upside surprise of this magnitude looks unlikely, the February report could remain too strong for comfort, from the Fed’s perspective.”
At 5:35 a.m. ET, Dow e-minis were down 127 points, or 0.39%, S&P 500 e-minis were down 11.75 points, or 0.3%, and Nasdaq 100 e-minis were down 4.5 points, or 0.04%.
Among other stocks, Gap Inc (NYSE:GPS) fell 6.7% in premarket trading after the apparel maker posted a bigger-than-expected fourth-quarter loss and forecast full-year sales below Wall Street estimates, signaling a slowdown in demand.
