Dow futures rise 245 pts; risk sentiment rises as bank worries retreat

March 29, 2023 7:19 AM EDT

By Peter Nurse -- U.S. stocks are seen opening higher Wednesday, as easing concerns about the health of the banking sector and retreating bond yields lifted risk sentiment.

At 07:00 ET (11:00 GMT), the Dow Futures contract was up 245 points, or 0.8%, S&P 500 Futures traded 35 points, or 0.9%, higher and Nasdaq 100 Futures climbed 105 points, or 0.8%.

Investor worries over U.S. and European banking troubles appear to be easing, with Michael Barr, the Fed's vice chairman for supervision, assuring lawmakers on Tuesday that depositor funds in U.S. banks are safe and the U.S. system is “sound and resilient.”

Barr is due later Wednesday to continue into a second day of testimony on Capitol Hill, this time in the House.

That said, attention is turning back to the Federal Reserve, and its battle to tame inflation.

The main equity indices closed lower Tuesday, with the tech-dominant Nasdaq Composite faring the worst, dropping 0.5%, following a renewed spike higher in bond yields on expectations that the easing banking turmoil will allow the Fed to continue to hike interest rates.

Bond yields have retreated Wednesday, helping the broader risk appetite, as investors await the release of the core PCE price index for February - the Fed's favored measure of inflation, on Friday.

Ahead of that, the housing market will be in focus, with pending home sales due at 10:00 ET (14:00 GMT). The real estate market has been pinched by rising mortgage rates, and is expected to fall 2.3% in February from the prior month.

In corporate news, earnings are scheduled from furniture and home goods store RH (NYSE: RH), once known as Restoration Hardware, while Lululemon Athletica (NASDAQ: LULU) stock soared premarket after the athletic clothing retailer forecast strong growth in annual sales and profit on resilient demand.

Micron (NASDAQ: MU) stock rose 2% premarket after the specialist in memory chips raised its guidance for the current quarter, as the inventory glut of recent months is worked off. The company also painted a rosy outlook for 2025 with artificial intelligence boosting sales.

Oil prices rose Wednesday, climbing for the third day in a row after industry data showed a surprisingly large draw in U.S. crude stocks, pointing to tighter supply in the near-term.

U.S. crude oil inventories fell by just over 6 million barrels in the week ended on March 24, according to data from the American Petroleum Institute, the biggest weekly drop of the year.

The U.S. Energy Information Administration will release its official weekly report later in the session.

By 07:00 ET, U.S. crude futures traded 1.3% higher at $74.16 a barrel, while the Brent contract climbed 1% to $78.94.

Additionally, gold futures fell 0.2% to $1,985.85/oz, while EUR/USD traded 0.1% higher at 1.0856.

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