Wall St set to open higher as bank fears ease, focus on Fed

Wall Street’s main indexes were set to open higher on Tuesday as the rescue of Credit Suisse calmed nerves about a bigger banking crisis, while investors awaited the outcome of the Federal Reserve’s monetary policy meet.

Traders now largely expect a 25-basis-point rate hike after the Fed’s two-day meeting concludes on Wednesday, half the 50 bps increase expected before the banking crisis triggered by the collapse of Silicon Valley Bank and Signature Bank earlier this month.

While the state-backed takeover of Credit Suisse by UBS as well as steps taken by central banks to boost liquidity have eased fears of a contagion to the broader banking sector, analysts still believe the crisis hasn’t been fully averted.

According to prepared remarks by U.S. Treasury Secretary Janet Yellen on Tuesday, the U.S. banking system is stabilising after aggressive regulatory actions, but additional measures to protect bank depositors may be necessary if smaller institutions experience deposit runs that pose a threat of further contagion.

In pre-market activity, shares of struggling regional institutions rose, with First Republic Bank recovering 21.3% following Monday’s record low.

According to a Monday Wall Street Journal story, JPMorgan Chase & Co. CEO Jamie Dimon is in charge of negotiations with other major banks about further measures to stabilise the First Republic, including a potential investment in the institution.

Peers Western Alliance Bank and PacWest Bancorp had increases of 6.7% and 7.1%, respectively.

For the second day in a row, U.S. Treasury rates increased. The yield on the two-year note, which best captures interest rate expectations, was last at 4.12%.

On news that Morgan Stanley has upgraded Meta Platforms Inc’s shares to “overweight” from “equal weight,” the company rose 2.6%, outperforming the majority of growth firms.

Investors will assess the February existing home sales statistics after the opening bell in order to determine the strength of the economy.