By Caroline Valetkevitch

NEW YORK (Reuters) – U.S. stocks ended little changed on Monday as investors took in the weekend auction of First Republic Bank and braced for this week’s expected interest rate hike from the Federal Reserve.

The KBW regional banking index dropped 2.7%, while shares of JPMorgan Chase & Co, which won the auction of failed lender First Republic, rose 2.1%.

JPMorgan will pay the U.S. Federal Deposit Insurance Corp $10.6 billion to take control of most of the regional bank’s assets.

Investors have been on edge about the banking system’s health following the collapse of two other regional banks in March.

“Hopefully this is sort of the last of the banking crisis, but something else might surface at some point,” said Tim Ghriskey, senior portfolio strategist at Ingalls & Snyder in New York.

Market watchers also digested the latest economic news, which suggested to some that the Fed may need to stick to its tightening cycle for the near term. The Institute for Supply Management (ISM) said on Monday its manufacturing PMI rose last month from March.

The Fed, which has been raising rates to cool inflation, is expected to hike rates an additional 25 basis points on Wednesday.

The Dow Jones Industrial Average fell 46.46 points, or 0.14%, to 34,051.7; the S&P 500 lost 1.61 points, or 0.04%, at 4,167.87; and the Nasdaq Composite dropped 13.99 points, or 0.11%, to 12,212.60.

Energy was down the most of the major S&P 500 sectors, falling 1.3% as crude oil prices declined .

Recent earnings, however, provided some lingering optimism for investors, Ghriskey said. First-quarter results from S&P 500 companies have mostly beaten expectations, easing economic concerns.

“We’ve had good earnings relative to expectations. Analysts for now have backed off of lowering estimates,” he said. “If we could have rates at this level … and corporate America continue to deliver, it’s very positive.”

Recent upbeat earnings from Alphabet Inc, Microsoft Corp and Meta Platforms Inc helped the benchmark S&P 500 notch its second consecutive month of gains on Friday.

The S&P 500 technology index climbed 0.2% on Monday, offsetting some of the day’s weakness.

Volume on U.S. exchanges was 10.24 billion shares, compared with the 10.37 billion average for the full session over the last 20 trading days.

Declining issues outnumbered advancers on the NYSE by a 1.36-to-1 ratio; on Nasdaq, a 1.17-to-1 ratio favored decliners.

The S&P 500 posted 35 new 52-week highs and one new low; the Nasdaq Composite recorded 88 new highs and 188 new lows.

(Additional reporting by Ankika Biswas and Sruthi Shankar in Bengaluru; Editing by Saumyadeb Chakrabarty, Shounak Dasgupta and Richard Chang)

By Stephen Culp

NEW YORK (Reuters) – U.S. stock indexes clawed back from steep losses to a mixed close on Monday as investors digested Friday’s employment report and prepared for an eventful week of inflation data and bank earnings.

Megacap momentum stocks dragged the tech-heavy Nasdaq slightly lower, while industrials helped boost the blue-chip Dow into green territory.

The bellwether S&P 500 ended the session nominally higher.

Economically sensitive transports, semiconductors, small-caps and industrials outperformed the broader market, hinting that the economy is sturdy enough to withstand further rate increases from the Federal Reserve.

“It’s a go nowhere day,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

“Investors are still convincing themselves that the Fed will raise interest rates by 25 basis points in May which could add to the likelihood of an impending recession. And investor agita is increased ahead of (this week’s) CPI and PPI reports.”

The Dow Jones Industrial Average rose 101.23 points, or 0.3%, to 33,586.52, the S&P 500 gained 4.09 points, or 0.10%, to 4,109.11 and the Nasdaq Composite dropped 3.60 points, or 0.03%, to 12,084.36.

Of the 11 major sectors of the S&P 500, six ended the session higher, led by industrials. Communication services and utilities suffered the largest percentage losses.

On Friday, a market holiday, the Labor Department released its March jobs report, which showed robust payrolls growth and a welcome but modest wage inflation cool-down.

While the report signaled the Fed’s restrictive policy is beginning to have its intended economic dampening effect, it raised the odds that the central bank will move forward with another 25 basis point increase to the Fed funds target rate at the conclusion of its May policy meeting.

At last glance, financial markets have priced in a 72%likelihood of that happening, according to CME’s FedWatch tool.

Recent indicators suggest a softening but sturdy economy, one that can withstand hawkish Fed policy as the central bank works to bring inflation closer to its 2% annual target.

“There’s clearly a disconnect between what the Fed is telling us they’re going to do and what the market believes the Fed is going to do,” said Oliver Pursche, senior vice president at Wealthspire Advisors, in New York. “When the Fed repeats time after time what their priorities are and what they’re going to do, they’re going to do it.”

Market participants will pay close attention to the consumer (CPI) and producer (PPI) price indexes, expected on Thursday and Friday, respectively, for a more complete picture on the extent to which inflation cooled in March.

On Friday, a trio of big banks – Citigroup Inc (NYSE:C), JPMorgan Chase & Co (NYSE:JPM) and Wells Fargo (NYSE:WFC) & Co – unofficially kick off first-quarter earnings season, and investors will be scrutinizing the reports for clues on the sector’s overall health after two U.S. regional banks collapsed in March.

As of Friday, analysts expected aggregate S&P 500 earnings down 5.2% year-on-year, a stark reversal from the 1.4% annual growth expected at the beginning of the quarter, according to Refinitiv.

“Rarely can you injure yourself falling out of a basement window,” Stovall added. “Expectations are set so low, the only surprise will be good news.”

Shale oil producer Pioneer Natural Resources (NYSE:PXD) Co jumped 5.8% following a report that Exxon Mobil Corp (NYSE:XOM) held preliminary talks with the company about a potential acquisition.

Charles Schwab (NYSE:SCHW) Corp gained 4.8% in the wake of the broker’s reported second-highest ever influx of client assets in March.

Chip stocks Micron Technology Inc (NASDAQ:MU) and Western Digital Corp (NASDAQ:WDC) gained 8.0% and 8.2%, respectively, on Samsung Electronics (OTC:SSNLF) Co Ltd’s plans to cut chip production.

Advancing issues outnumbered declining ones on the NYSE by a 1.63-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored advancers.

The S&P 500 posted 2 new 52-week highs and no new lows; the Nasdaq Composite recorded 50 new highs and 155 new lows.

Volume on U.S. exchanges was 9.09 billion shares, compared with the 12.28 billion average over the last 20 trading days.

By Wayne Cole

SYDNEY (Reuters) – Oil prices surged on Monday after Saudi Arabia and other OPEC+ oil producers announced a surprise round of output cuts, a potentially ominous sign for global inflation just days after a slowdown in U.S. price data had boosted market optimism.

Brent oil futures jumped $5.16 to $85.05 a barrel on news output would be cut by around 1.16 million barrels per day, while U.S. crude climbed $4.88 to $80.55. [O/R]

The change comes before a virtual meeting of an OPEC+ ministerial panel, which includes Saudi Arabia and Russia, and which had been expected to stick to 2 million bpd of cuts already in place until the end of 2023.

The latest reductions could lift oil prices by $10 per barrel, the head of investment firm Pickering Energy Partners said on Sunday.

Goldman Sachs lifted its forecast for Brent to $95 a barrel by the end of the year and to $100 for 2024.

“Today’s surprise cut is consistent with the new OPEC+ doctrine to act pre-emptively because they can without significant losses in market share,” Goldman said.

“While surprising, this cut reflects important economic and likely political considerations.”

The surge in energy costs somewhat overshadowed Friday’s slower reading for core U.S. inflation which had seen Wall Street end the month on a strong note. [.N]

S&P 500 futures dipped 0.4% on Monday, while Nasdaq futures lost 0.7%.

MSCI’s broadest index of Asia-Pacific shares outside Japan eased 0.2%. Japan’s Nikkei edged up 0.4%, though a survey of manufacturers came in just under forecasts.

The jolt to inflation expectations saw yields on U.S. two-year Treasuries rise 3 basis points to 4.104%, while Fed fund futures pared back expectations for rate cuts later in the year.

The market nudged up the probability of the Federal Reserve hiking rates by a quarter point in May to 61%, from 48% on Friday, and had 40 basis points of cuts priced in by year end.

That in turn helped the dollar gain 0.25% on the Japanese yen to 133.14, while the euro eased almost 0.4% to $1.0802. The rise in oil prices is bad news for Japan’s trade balance given it imports most of its energy.

The lift in the dollar and yields nudged gold prices down nearly 0.5% to $1,958 an ounce. [GOL/]

The outlook for U.S. rates could be impacted by data on ISM manufacturing and payrolls out this week, though the reaction to Friday’s jobs report will be muted by the Easter holidays.

Central banks in Australia and New Zealand hold policy meetings this week, with the latter expected to hike by another quarter point to 5.0%.

Markets are wagering the Reserve Bank of Australia (RBA) will pause its tightening campaign after 10 straight rises, though analysts are more divided on whether it might still hike.

(Reporting by Wayne Cole; Editing by Shri Navaratnam

By Ambar Warrick

Investing.com– Consumer price index inflation in Japan’s capital fell slightly less than expected in March, data showed on Friday, as the impact of government subsidies on utility prices was largely offset by sharp increases in the prices of most other goods.

Tokyo Core CPI rose 3.2% in the 12 months to March, data from the Statistics Bureau showed, more than expectations for growth for 3.1%, but below the prior month’s reading of 3.3%. The core reading excludes volatile items such as fresh food.

Including all items, overall Tokyo CPI rose 3.3% in March, down slightly from the 3.4% seen in the prior month. 

The reading, which usually heralds a similar trend in nationwide inflation data released later, indicates that while government subsidies on utilities helped ease some cost pressures, high food and household goods prices kept inflation elevated in Tokyo through March.

Still, March’s reading marks a second straight month that Tokyo inflation has retreated after hitting an over 40-year high of 4.3% in January. The Tokyo Core CPI was also at its lowest level since October. 

The drop in inflation was largely driven by government subsidies on electricity prices, which sank 6% in March. The Japanese government had earlier this year rolled out an additional 2 trillion yen ($1=133.01 yen) to offer subsidies on some utilities and help rein in high inflation.

But this was largely offset by steadily increasing prices for most other goods. Food prices rose 7.6%, while gas prices jumped over 12% in the month.

Friday’s reading, while stronger than expected, still comes in line with a Bank of Japan forecast that inflation will ease in the first half of 2023. This is expected to keep the central bank’s ultra-loose monetary policy unchanged, for the time being.

But inflation is expected to pick up again by late-2023, which could see the BOJ once again consider tightening policy.

The yen sank 0.3% to 133.08 after the reading, given that it still showed some easing in inflation.

Data last week showed that nationwide Japanese inflation eased further from 40-year highs in February. But March’s Tokyo CPI reading indicates that inflation may now be retreating at a slower than expected pace. 

By Jamie McGeever

(Reuters) – A look at the day ahead in Asian markets from Jamie McGeever.

An interest rate decision in Thailand and Australian inflation top a light Asian calendar on Wednesday, with broader risk appetite likely to be tempered by a further rebound in U.S. bond yields.

The two-year Treasury yield rose only a few basis points, but the fact that it increased at all following the previous day’s 21 bps surge is notable, and rate-sensitive tech stocks dragged Wall Street into the red.

It is very early days, but there is a growing sense of optimism that the banking shock is abating. Michael Barr, the Fed’s vice chairman for supervision, and FDIC Chairman Martin Gruenberg told lawmakers on Wednesday that depositor funds in U.S. banks are safe and sound.

But this relief is running up what looks like a renewed spike higher in bond yields and borrowing costs, which is dampening risk appetite.

One curiosity is the dollar, weakening again on Tuesday despite the rise in U.S. bond yields. Indeed it mostly struggled to catch a safe-haven bid when the banking stresses were most acute and is now struggling even when U.S. yields are rising.

Dollar index, https://fingfx.thomsonreuters.com/gfx/mkt/zgpobaejnvd/USDINDEX.png

Asia’s equity spotlight on Wednesday will shine on China’s Alibaba Group after the conglomerate founded by Jack Ma said on Tuesday it plans to split its business into six main units covering e-commerce, media and the cloud.

The news – a surprising and major revamp as China looks to ease regulatory crackdowns and support private enterprises – sent U.S.-listed shares up 14% on Tuesday, recovering some of the nearly 70% lost since curbs were imposed in late 2020.

On the Asian policy front on Wednesday, the Bank of Thailand is set to implement its fifth consecutive quarter-point rate hike in an attempt to get inflation back within target.

Eighteen of 22 economists polled by Reuters expect the BOT to raise its benchmark one-day repurchase rate to 1.75%.

Inflation has fallen to a 13-month low of 3.79%, but that is still above the BOT’s target range of 1% to 3% and policymakers have signaled that the tightening cycle is not yet over.

Australian inflation figures for February and a raft of data from Vietnam – Q1 GDP and March inflation, trade and industrial production – will also be released.

By Wayne Cole

SYDNEY, (Reuters) – Asian shares followed U.S. stock futures higher on Monday on hopes authorities were working to ring fence stress in the global banking system, even as the cost of insuring against default neared dangerous levels.

Helping nerves were reports First Citizens BancShares Inc was in advanced talks to acquire Silicon Valley Bank from the Federal Deposit Insurance Corp.

S&P 500 futures firmed 0.5% in early trade while Nasdaq futures added 0.4%.

MSCI’s broadest index of Asia-Pacific shares outside Japan edged up 0.1%, with trading cautious. Japan’s Nikkei gained 0.1% and South Korea 0.2%.

The mood remained jittery after shares in Deutsche Bank fell 8.5% on Friday and the cost of insuring its bonds against the risk of default jumped sharply, along with the credit default swaps (CDS) of many other banks.

“The current level of credit default swaps for European banks is just a little lower than it was during the height of the European financial crisis in 2013,” noted Naeem Aslam Chief Investment Officer at Zaye Capital Markets.

“If these CDS do not normalise, it is highly likely stock market may continue to suffer for many days.”

Over in the United States, depositors have been fleeing smaller banks for their larger cousins or to money market funds. Flows to money market funds have risen by more than $300 billion in the past month to a record atop $5.1 trillion.

Minneapolis Fed President Neel Kashkari on Sunday said officials were watching “very, very closely” to see if the banking stress led to a credit crunch that threatened to tip the economy into recession.

That, in turn, meant the Fed was closer to a peak in rates, he added. Markets are well ahead of the central bank in pricing around an 80% chance rates have already peaked, while a first rate cut is seen as early as July.

Fed Governor Philip Jefferson speaks later on Monday, while Fed Vice Chair for Supervision Michael Barr testifies on “Bank Oversight” before the Senate on Tuesday.

Yields on two-year Treasuries have fallen an astonishing 102 basis points so far this month to stand at 3.77%, while the entire yields curve out to 30 years is below the 4.85% effective funds rate.

That dive has sometimes been a drag on the dollar, at least against the safe-haven Japanese yen where it stands at 130.85 yen, having touched a seven-week low of 129.65 last week.

The euro suffered its own reversal on Friday amid the worries over Deutsche, and it was last at $1.0767 and well off last week’s $1.0930 top.

The drop in yields has combined with the run from risk to burnish gold, which was trading at $1,975 an ounce after reaching a high above $2,009 last week. [GOL/]

Oil prices were steadier early Monday, but are still nursing losses of almost 10% for the month as worries about global growth undermine commodities in general. [O/R]

Brent added 43 cents to $75.42 a barrel, while U.S. crude rose 47 cents to $69.73 per barrel.

(Reporting by Wayne Cole; Editing by Sam Holmes)

By Nupur Anand, Lananh Nguyen and Andrea Shalal

(Reuters) – A scramble by troubled U.S. lender First Republic Bank (NYSE:FRC) to secure a capital infusion kept worries about the broader banking sector alive on Wednesday as authorities considered steps to further strengthen financial stability.

While recent market turmoil has eased, the Federal Reserve’s meeting later in the day is now a major focus for investors, with traders split over whether the U.S. central bank will be forced to pause its hiking cycle to ensure financial stability.

The Fed’s relentless rate hikes to rein in inflation have been partly blamed for sparking the biggest meltdown in the banking sector since the 2008 financial crisis.

The collapse of Silicon Valley Bank, which sank under the weight of bond-related losses due to surging interest rates, kicked off a tumultuous 10 days for banks which culminated, for now, in the 3 billion Swiss franc ($3.2 billion) Swiss regulator-engineered takeover of Credit Suisse by rival UBS on Sunday.

(GRAPHIC: Traders bet on rate hike as fears of bank crisis ease Traders bet on rate hike as fears of bank crisis ease- https://www.reuters.com/graphics/USA-RATES/FEDWATCH/xmpjkbnxmvr/chart.png)

The wipeout of Credit Suisse’s Additional Tier-1 (AT1) bondholders has sent shockwaves through bank debt markets, and some Asian lenders may find it difficult to replenish their capital by issuing AT1 bonds, Citigroup (NYSE:C) said in a research note on Wednesday.

And worries over the health of mid-sized U.S. lenders linger, particularly First Republic.

For now, Credit Suisse’s rescue appears to have assuaged the worst fears of systemic contagion, boosting shares of European banks and U.S. regional lenders.

The S&P 500 banks index rallied 3.6%, its largest one-day gain since November.

However, First Republic’s efforts to secure a capital infusion continued without success on Tuesday, as the troubled regional lender started to plan for the possibility it may need to downsize or get a government backstop.

That sent shares of First Republic tumbling 9% in extended trade on Tuesday evening, having surged as much as 60% and closing regular trade up 30%. First Republic has shed 80% of its market value this month.

The San Francisco-based bank is looking at ways it can downsize if its attempts to raise new capital fail, three people familiar with the matter told Reuters. JPMorgan Chase (NYSE:JPM) has been helping the bank find new sources of capital after a $30 billion injection of deposits from big banks failed to stem fears over its viability.

The scenarios were being discussed as major bank chief executives gathered in Washington for a scheduled two-day meeting starting Tuesday, sources familiar with the matter said.

Among options was the possibility the government could play a role in lifting assets out of First Republic that have eroded its balance sheet, Bloomberg News reported on Tuesday, citing people with knowledge of the situation.

‘FEEL SECURE’

Policymakers from Washington to Tokyo have stressed the current turmoil is different from the crisis 15 years ago, saying banks are better capitalised and funds more easily available.

Still, Australia’s prudential regulator has started asking the country’s banks to declare their exposure to startups and crypto-focused ventures following the collapse of Silicon Valley Bank, according to the Australian Financial Review.

U.S. Treasury Secretary Janet Yellen said the country’s banking system was sound despite recent pressure.

(GRAPHIC: Over $95 billion in market value wiped out in 2 weeks- https://www.reuters.com/graphics/GLOBAL-BANKS/USA/myvmobkeovr/graphic.jpg)

Deputy Treasury Secretary Wally Adeyemo said a review of the failures of Silicon Valley Bank and rival Signature Bank (NASDAQ:SBNY) was in order.

“It’s … important that we review the failures of the two banks in question to ensure we have a set of rules and procedures for the banking system that continues to protect our economy and depositors across the country,” Adeyemo said on Tuesday at an event hosted by the U.S. Hispanic Chamber of Commerce.

“We of course continue to monitor the current situation and consider what steps can be taken to further strengthen America’s financial stability,” he said, without elaborating.

Political pressure continued to grow in the United States to hold bank executives accountable. The Senate Banking Committee’s chairman said the panel will hold the “first of several hearings” on the collapse of SVB and Signature Bank on March 28.

(GRAPHIC-Credit Suisse rescue: https://www.reuters.com/graphics/GLOBAL-BANKS/myvmobgwyvr/chart.png)

($1 = 0.9280 Swiss franc)

By Oliver Gray 

Investing.com – U.S. stock futures were trading higher during Sunday’s evening deals as investors monitored increased pressure on the financial sector following reports that embattled bank Credit Suisse (SIX:CSGN) has been bought out by UBS Group AG (SIX:UBSG) for $3 billion Swiss francs (US$4.8 billion) in a government-backed deal.

By 6:35pm ET (10:35pm GMT) Dow Jones Futures were up 0.2% while S&P 500 Futures and Nasdaq 100 Futures gained 0.2% apiece.

Ahead in the week, market participants will be closely monitoring the Fed’s interest rate decision amid expectations of a 25 basis point hike. Meanwhile, new and existing home sales, building permits, durable goods orders, Manufacturing and services PMIs, as well as a speech from FOMC member Bullard.

During Friday’s trade, the Dow Jones Industrial Average fell 384.6 points or 1.2% to 31,862, the S&P 500 lost 43.6 points or 1.1% to 3,916.7 and the NASDAQ Composite fell 86.8 points or 0.7% to 11,630.5. for the week, the Dow added 0.1%, the S&P 500 added 2.1% and the NASDAQ gained 5.3%.

On the bond markets, United States 10-Year rates were at 3.436%

By Oliver Gray 

Investing.com – U.S. stock futures were trading in a mixed fashion during Wednesday’s evening trade amid growing fears of a widespread banking crisis as Credit Suisse (SIX:CSGN) Group (NYSE:CS) tanked 30% during the regular session after Saudi National Bank ruled out further investment.

By 6:40pm ET (10:40pm GMT) Dow Jones Futures were flat and S&P 500 Futures ticked 0.1% higher and Nasdaq 100 Futures added 0.2%.

In extended deals, Adobe Systems (NASDAQ:ADBE) added 4.6% after reporting Q1 EPS of $3.80 versus $3.68 expected on revenues of $4.66 billion $4.62 billion expected. The company forecasted Q2 2023 EPS in the range of $3.75-$3.80 versus $3.76 expected and revenues of $4.75-4.78 billion versus consensus of $4.76 billion.

LivePerson Inc (NASDAQ:LPSN) dropped 38.7% LOWER, reporting Q4 EPS losses of $0.55 per share versus estimates of $0.12, while revenue came in at $122.5 million versus $126.93 million.

Uipath Inc (NYSE:PATH) added 12.6% after the company reported Q4 EPS of $0.15 versus $0.06 expected on revenues of $308.5 million versus $278.64 million expected.

Ahead in Thursday’s trade, investors will be monitoring preliminary building permits, import and export price index data, housing starts, weekly jobless claims and the Philadelphia fed manufacturing index.

During Wednesday’s regular session, the Dow Jones Industrial Average fell 280.8 points or 0.9% to 31,874.6, the S&P 500 lost 27.4 points or 0.7% to 3,891.9 while the NASDAQ Composite added 5.9 points or 0.1% to 11,434.1.

On the bond markets, United States 10-Year yields were at 3.462%.

(Bloomberg) — Asian equities look set for declines Tuesday while bonds rallied in early trading as the collapse of Silicon Valley Bank continued to reverberate across global markets.

Policy-sensitive two-year government bond yields tumbled around 20 basis points in New Zealand, as did the rate on Australia’s three-year maturity. Shares dropped in these two markets, with financial stocks prominent among the decliners. Futures contracts for benchmark indexes in Japan and Hong Kong were also lower.

In the US on Monday, the yield on the two-year Treasury note plunged in its biggest one-day slump in decades while tech stocks rebounded from last week’s rout. The two-year yield dropped by more than a half-percentage point, logging the biggest three-day retreat since Black Monday of October 1987.

The dollar held most of its losses in early Asian trading after erasing its gains for the year on Monday. The yen, Australian dollar and offshore yuan all appreciated more than 1% against the greenback on Monday.

The market turmoil has caused a swift reassessment over the direction of Fed policy. Swaps traders are now pricing a less than 60% chance the Fed will hike by another quarter percentage-point later this month.

Goldman Sachs Group Inc. economists as well as asset managers at the world’s largest actively managed bond fund from Pacific Investment Management Co. said the Fed could take a breather on the policy rate following the collapse of SVB. Nomura economists took it one step further, saying the Fed could cut its target rate next week.

Expectations had weighed a hike of as much as 50 basis points after Chair Jerome Powell addressed lawmakers last Tuesday. Traders will soon turn their attention back to US consumer price index report, which could drive further bets on the Fed’s next move.

The S&P 500 closed Monday down 0.2%, after bouncing between gains and losses amid a rout in bank shares while the policy-sensitive Nasdaq climbed 0.8%, the most in over a week. The fallout from SVB’s collapse prompted President Joe Biden to promise stronger regulation of US lenders, while reassuring depositors that their money is safe.

The KBW Bank Index logged its biggest one-day drop since the start of the Covid-19 pandemic. Asian investors will also have their focus on the region’s banking stocks, which were under some pressure Monday, particularly in Japan.

Treasury Secretary Janet Yellen said her office would protect “all depositors” at SVB. The government actions will also include a new lending program that Fed officials said would be big enough to protect uninsured deposits in the wider US banking sector. Still, the sudden closing of New York’s Signature Bank by state regulators Sunday underscored the urgency of stabilizing the financial system.

Wall Street’s so-called “fear gauge” spiked, with the Cboe Volatility Index rising above 30 for the first time since October.

Here is how Wall Street is weighing the Fed’s next move:

We forecast a 25bp Fed hike, but Powell talk and high CPI point to close call. The threat to our views comes from Fed Chair Powell. While Powell opened the door to a large March hike, he did not walk through it, noting that the upcoming decision will be determined by “the totality of the data.”

The Fed decision will incorporate two additional factors. First, this week’s CPI report. Second, the Fed will consider the potential for financial stress to build.

— Marko Kolanovic, JPMorgan Chase & Co. strategist

The Fed has to be off the table for now. They pushed on rates until something cracked, well guess what? Something cracked.

To see QT stop would not be surprising, and maybe something to support the market. I think we’re back in crisis mode, and remember, to me, bank runs are way way way more important than inflation, so that’s what they’ve got to be arresting.

— Peter Tchir, head of macro strategy at Academy Securities

Pressure on banks dampens the rate outlook some, but decisive action on financial stability gives the Fed latitude to continue with rate hikes; 50 in March is not impossible as it would have been under a weak financial stability response and ongoing runs but looks very implausible – we still see 25 with a high bar to pause.

— Krishna Guha, Evercore ISI head of central bank strategy

Speculation about what the Fed’s going to do before we even see CPI is probably ill-founded. But if you look at the fed funds futures, they’re pricing in cuts in the fourth quarter and they’re pricing in the credible potential — like a 50% chance — that the Fed does nothing at the March meeting. So there’s too much noise around what else happens, what does this mean for monetary policy.