Stocks Extend Slide, Jobs Report On Deck, SVB Collapse, Oracle Mixed, Mind The Gap – Five Things To Know

Stocks extend slide amid bank sector slump; Jobs Report: Workin’ for a livin’; SVB needs capital ASAP; Oracle sees more profits and Mind the Gap (Shares).

Five things you need to know before the market opens on Friday March 10:

1. — Stocks Extend Slide Amid Bank Sector Slump

U.S. equity futures extended declines Friday, while Treasury bonds yields tumbled amid a rush to safe-haven assets, as investors remained concerned for the health of the banking system following the share price collapse of start-up lender Silicon Valley Bank while bracing for a crucial February jobs report prior to the opening bell.

The broadest measure of global stocks, the MSCI World index, was marked 1.22% lower on the session, and pegged at a two-month low, in overnight trading following last night’s sell-off on Wall Street, triggered in part by an attempted $2.25 billion share sales by SVB aimed at supporting its rate-sensitive balance sheet.

The SVB slump ignited worries of contagion across the U.S. financial sector, with a key benchmark of shares falling 4.2% — the most since June of 2020 — and the S&P 500 banks index slumping 6.6%. 

Investors, seeking to flee from risk markets amid the bank-stock sell off and ahead of Friday’s February jobs report, piled into U.S. Treasury bonds, taking yields on benchmark 2-year notes some 20 basis points lower from their Thursday peak to 4.85% in overnight trading. Benchmark 10-year notes, meanwhile, fell 10 basis points to 4.866% following Thursday’s bigger-than-expected jump in weekly jobless claims.

Traders are now looking with pointed interest in today’s non-farm payroll report, which is expected to show a slowdown in jobs growth from the blowout 517,000 tally over the month of January, but may still indicate elevated wage growth in the resilient domestic economy. The data is expected at 8:30 am Eastern time.

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which closed at the lowest level since January 19 last night, were indicating a 15 point opening bell slide while those linked to the Dow Jones Industrial Average was looking at a 150 point decline. The tech-focused Nasdaq is looking at a more modest 15 point decline thanks in party to the pullback in Treasury yields.

In overseas markets, Europe’s Stoxx 600 fell 1.58% in early Frankfurt trading while Britain’s FTSE 100 was marked 1.95% lower in London.

Overnight in Asia, the region-wide MSCI ex-Japan index fell 1.77% following both the overnight selloff on Wall Street and a downbeat outlook on Chinese consumer spending from e-commerce giant In Japan, the Nikkei 225 ended 1.67% lower in Tokyo after the Bank of Japan made no changes to its monetary policy following the final meeting lead by Governor Haruhiko Kuroda.

2. — Jobs Report: Workin’ For A Livin’

The Labor Department will publish its key February jobs report Friday, with analysts expecting a marked slowdown in hiring from the blistering pace recorded in January while keeping a close eye on wage growth in an increasingly complicated market.

The massive job gains from January, which included 517,000 new hires and an unemployment rate of 3.4%, will be difficult if not impossible to replicate, but a solid headline reading will likely trigger extended bets on a 50 basis point rate hike from the Federal Reserve later this month following hawkish warnings from Chairman Jerome Powell earlier in the week.

“If — and I stress that no decision has been made on this — but if the totality of the data were to indicate that faster tightening is warranted, we would be prepared to increase the pace of rate hikes,” Powell told lawmakers Wednesday in an unusual caveat to his prepared statement from his previous session on Capitol Hill. 

Economists are divided as to how the February numbers will arrive, but the broad Wall Street consensus suggests a headline tally of 205,000 new hires, a modest uptick in the unemployment rate to 3.5% and average hourly earnings rising by around 4.8% from last year.

3. — SVB Needs Capital ASAP 

SVB Financial Group  (SIVB) – Get Free Report shares extended their Thursday collapse in pre-market trading as investors pulled cash from the California-based lender following a liquidity crunch that triggered and emergency capital increase.

SVB Financial, which does business as Silicon Valley Bank and lends money to tech start-ups, is attempting to raise around $2.25 billion in new equity in order to shore-up a $1.8 billion hole in its balance sheet caused, in part, by losses in its Treasury bond portfolio.

The group also noted an eroding deposit base, given the marked slowdown in venture capital markets, as well as ongoing pressure on its profit margins linked to the impact of relentless Fed rate increases.

CEO Gregory Becker held an emergency call with investors late Friday, urging them to support the capital increase, while reports have suggested that a key backer, Peter Thiel’s Founders Fund, is asking portfolio companies to take their money out of the Santa Clara-based bank.

SVB Financial shares, which plunged 60.4% yesterday, were marked 44.4% lower in pre-market trading to indicate an opening bell price of $59.00 each.

4. — Oracle Sees More Profits

Oracle Corp  (ORCL) – Get Free Report slumped lower in pre-market trading after it posted a mixed set of third quarter earnings that offset an optimistic near-term outlook for the cloud and enterprise software group.

Oracle posted a bottom line of $1.22 per share for the three months ending in January, the group’s fiscal third quarter, nudging just ahead of Street forecasts. Revenues, however, were modestly light of analysts’ estimates at $12.39 billion, even as cloud-based sales surged 45% from last year to $4.1 billion.

Looking into the current quarter, Oracle said it expects to add more healthcare customers thanks to last year’s $28 billion purchase of Cenrer  (CERN) – Get Free Report, the second-largest designer of software used by doctors and hospitals to mange and store medical records, with overall revenues growing between 15% and 17% and profits coming in between $1.50 and $1.60 per share.

Oracle shares were marked 5.6% lower in pre-market trading to indicate an opening bell price of $82.02 each.

5. — Mind The Gap (Shares)

Gap Inc  (GPS) – Get Free Report shares tumbled in pre-market trading after the struggling clothing group posted a wider-than-expected fourth quarter loss and issued a downbeat sales outlook amid a pullback in consumer spending and an uncertain economy. 

Gap said its adjusted loss for the three months ending in January was pegged at 76 cents per share, well outside the -46 per share forecast, with revenues down 6% from the same period last year to $4.24 billion.

The group, which also operates the Old Navy and Banana Republic brands, said 2023 sales would likely fall by a “low to mid-single digit” range while noting that the CEO of its Athleta brand — Mary Beth Laughton — had left the company.  

“We are flattening the organization by increasing spans of control and decreasing management layers to improve the quality and speed of decision-making, starting with our leadership team,” said CEO Bobby Martin. “As we look to seize the potential and remain competitive amid the dynamic landscape, we believe now is the right time to bring in a new leader who can position Athleta for long-term success.”

Gap shares were marked 8.5% lower in pre-market trading to indicate an opening bell price of $10.60 each. 

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