Dow futures fall 100 pts; payrolls and banking sector in spotlight

With the focus on the forthcoming employment data and the struggling banking sector, U.S. equities are expected to begin neutral Friday, recovering following the previous session’s selloff.

At 12:00 GMT, the Dow Futures contract was down 100 points or 0.3%, the S&P 500 Futures contract was down 4 points or 0.1%, and the Nasdaq 100 Futures contract was up 25 points or 0.2%.

The three major market indices finished substantially down on Thursday, led down by significant losses in the banking sector. The Dow Jones Industrial Average plummeted almost 500 points, or 1.7%, while the S&P 500 sank 1.9% and the tech-heavy Nasdaq Composite fell 2.1%.

The S&P 500 bank index fell 4.1%, its biggest one-day drop in nearly three years on Thursday, with this weakness triggered by SVB Financial Group (NASDAQ:SIVB) – also known as Silicon Valley Bank – announcing an emergency $2.25 billion capital raise to cover expected losses as well as crypto bank Silvergate Capital’s (NYSE:SI) decision to wind down operations.

While Silvergate’s client base of crypto exchanges and investment platforms is relatively contained, problems at SVB could have more widespread repercussions for the U.S. banking industry.

Nerves are also frayed ahead of the release of the monthly official jobs report, particularly after Federal Reserve Chair Jerome Powell mentioned this data point in his semi-annual testimony to Congress as one of the key indicators the central bank policymakers look at when deciding future monetary policy.

The market is now increasingly betting that March’s rate decision by the Fed will be a half-percentage-point hike, an acceleration from the 25 basis point increase in early February.

Analysts expect the economy added 205,000 jobs last month, but they are also waiting to see if January’s red-hot 517,000 number will be revised.