Futures tied to the Dow Jones Industrial Average fell Friday as investors contemplated the future of First Republic and other banks.
Dow futures dipped 218 points, or 0.7%. S&P 500 futures slid 0.6%, while Nasdaq-100 futures lost 0.3%.
First Republic slid 14% in the premarket despite gaining nearly 10% in Thursday’s session, when a group of banks said it would aid First Republic with $30 billion in deposits as a sign of confidence in the banking system. That dip weighed on the SPDR Regional Banking ETF (KRE), which was down 2.8% in extended trading.
U.S.-listed shares of Credit Suisse were also down in extended hours as traders parsed through the bank’s announcement that it would borrow up to $50 billion francs (nearly $54 billion) from the Swiss National Bank. Shares were unchanged when the market closed on Thursday.
Still, the market is on track to post wins this week as investors weighed what the bank crisis could mean for the Federal Reserve’s policy meeting next week. The Dow is up 1.1% for the week, while the S&P 500 has advanced 2.6% — on pace for its best weekly performance since January. The Nasdaq Composite gained 5.2%, on track for its best week since November.
“There’s a push-pull in the market right now,” said Infrastructure Capital Advisors’ CEO Jay Hatfield. “The regional banking crisis is a huge negative for the economy and the market. But the overhang that existed prior to the banking crisis was an overly hawkish and irrational Fed.”
“Every Fed tightening cycle does expose a weakness in the economy,” he added. “What we have here is a FDIC insurance debacle. We urge people to be a little bit cautious, particularly until we hear what the Fed has to say.”
Traders will watch out for the preliminary reading of the consumer sentiment index from the University of Michigan, as well as industrial and manufacturing production to get a better grasp on the economy ahead of the Fed’s meeting next week.