MARKET WRAPS

Watch For:

EIA Weekly Petroleum Status Report; FOMC rate decision and projections; Canada New Housing Price Index

Today's Top Headlines/Must Reads:

- What to Watch From the Fed Meeting

- Bank Failures Train Spotlight on Shortcomings in Risk Management

- Apple, Microsoft Dominate U.S. Markets After FAANG Trade Fizzles

- First Republic Bank Taps Lazard for Help With Review of Strategic Options

- How the Last-Ditch Effort to Save Silicon Valley Bank Failed

Follow WSJ market coverage here

Opening Call:

Stock futures dipped on Wednesday as traders eyed the difficult rate-setting choice facing the Federal Reserve.

Futures markets are pricing in an 89% probability of a 25 basis point hike to a range of 4.75% to 5%.

"There'll be plenty of focus on whether the Fed hikes today, but just as important will be how they're looking at the current turmoil and whether they still expect any more rate hikes after today," Deutsche Bank said.

"Our U.S. economists think that the [European Central Bank's] decision last week offers a relevant blueprint for the Fed: raise rates in line with expectations, drop forward guidance, but signal a continued tightening bias," Deutsche added.

Across the pond, the U.K. inflation data showed price rises accelerating again and remaining in double digits. The Bank of England will deliver its rate decision Thursday.

"As inflation remains well above the BoE target, there's now a stronger case for the BoE to press ahead with a rate hike, even in a period of greater financial market uncertainty," Moneyfarm said.

"It will be interesting to see how the BoE and the Fed consider the dynamics between fighting inflation and managing financial stability. The ECB has already indicated that it sees no contradiction between those two goals," Moneyfarm added.

Stocks to Watch

Array Technologies was down 2.2%. It reported fiscal fourth-quarter profit and revenue that beat analysts' forecasts.

Diebold Nixdorf said that it secured $55 million in additional funds to support its near-term goals. Shares rose 40% in after-hours trading.

First Republic Bank rose 1.6% in premarket trading. The stock fell in after-hours trading Tuesday following a report from The Wall Street Journal that said the regional lender this week had hired Lazard to help with a review of strategic options that could include a sale, and tapped consultant McKinsey to assist with the bank's post-crisis structure.

GameStop said cost-cutting measures helped it record its first quarterly profit after seven consecutive quarters of losses. Shares rose almost 40% in premarket trading.

Luminar Technologies fell 7.9% to $7.12 after shares of the lidar company were downgraded to Sell from Neutral at Goldman Sachs with a price target of $5, the Fly reported.

Nike reported quarterly earnings and sales that beat Wall Street expectations but shares declined 1.6% in premarket trading as gross margins contracted.

Telesis Bio issued 2023 revenue guidance above estimates. Shares rose 10% in after-hours trading.

Market Insight

Fitch expects global market volatility to continue despite the government-brokered deal for UBS to acquire Credit Suisse likely easing concerns about a broader financial contagion.

"Investors and depositors are still trying to understand the magnitude of risks to the banking sector and...will remain jittery in the near term."

The rescue agreement, while positive, highlights the fragility of the banking sector and regulators' willingness to backstop additional risks, Fitch said.

The urgency of the deal also shows that despite regulators reaffirming Credit Suisse's capital position, they weren't certain the bank would be able to stem the loss of confidence, which could pose a more systemic risk, Fitch added.

Forex:

The Fed's likely hike of interest rates by 25bps should help the dollar recover, ING said.

However, the decision is "a close call," and dollar gains may be limited by the improved sentiment, ING added.

"There is room for the dollar to recover some ground on the back of a moderate hawkish surprise by the Fed. However, we are observing a gradual improvement in investor sentiment... which makes us tilt to a bearish short-term bias in the dollar."

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Sterling rose after U.K. inflation data was unexpectedly strong, with headline annual CPI increasing by 10.4% in February.

Economists polled by The Wall Street Journal had expected CPI to decline to 9.9%, from January's 10.1%.

Read U.K. Inflation Resumes Its Rise, Defying Expectations

Energy:

Oil prices were weaker in Europe ahead of the Fed decision.

Metals:

Base metals prices were mixed, while gold moved higher in early London trading, as investors looked to the Fed rate decision.

Iron Ore

Commonwealth Bank of Australia said the price of iron ore is likely to retreat to $100 a metric ton by the fourth quarter, pulled lower by soft Chinese steel demand.

"Current policy settings suggest that China's steel demand impulse should ease through 2023."

Although, financial turmoil in advanced economies could prompt China to direct more stimulus to infrastructure if its own annual growth target comes under threat, which would be positive for iron-ore prices, CBA said.

TODAY'S TOP HEADLINES

First Republic Bank Taps Lazard for Help With Review of Strategic Options

First Republic Bank is beefing up its adviser ranks as the troubled lender seeks to stay afloat and plan for a postcrisis future amid a trans-Atlantic crisis of confidence in the banking system.

The California bank this week tapped Lazard Ltd. to help with a review of strategic options that could include a sale, a capital infusion or asset trimming, according to people familiar with the matter. It also hired consulting firm McKinsey & Co. to help map out a postcrisis structure for the bank, the people said.

How the Last-Ditch Effort to Save Silicon Valley Bank Failed

Depositors were draining their accounts via smartphone apps and telling their startup networks to do the same. But inside Silicon Valley Bank, executives were trying to navigate the U.S. banking system's creaky apparatus for emergency lending and to persuade its custodian bank to stay open late to handle a multibillion-dollar transfer.

The depositors won the race. Regulators shut down SVB around the time a multibillion-dollar cash infusion was set to arrive, marking the second-largest bank failure in U.S. history.

Silicon Valley Bank's Former Parent Says FDIC Seized About $2 Billion of Its Cash

Silicon Valley Bank's former parent company can't access about $2 billion that it had deposited at the failed bank, after regulators froze the company's accounts and are exploring whether it should help shoulder costs associated with the bank's failure.

Lawyers for SVB Financial Group, the holding company that used to control the now-defunct bank, claimed during the company's first hearing in bankruptcy court on Tuesday that the Federal Deposit Insurance Corp. has improperly blocked access to cash stored in accounts it holds at the successor to Silicon Valley Bank.

TikTok CEO Shou Zi Chew Promises Firewall to Shield User Data

WASHINGTON-TikTok CEO Shou Zi Chew plans to offer a series of broad promises on platform safety and security at a much-anticipated congressional hearing on Thursday, according to his testimony.

Mr. Chew will pledge to keep safety on Chinese-owned TikTok a top priority-especially for teenagers-and also will promise to firewall U.S. user data from foreign access and keep the platform free from government interference.

Ares Forms $1 Billion Credit Secondary Venture With Mubadala

Ares Management Corp. and Mubadala Investment Co. have formed a joint venture to buy secondhand stakes in private-credit funds.

The partnership, anchored by the Abu Dhabi-based sovereign-wealth fund, will initially invest around $1 billion in deals involving portfolios acquired from investors in private funds and deals instigated by fund managers, according to a statement seen by The Wall Street Journal. The amount of capital made available for investment will increase as the credit secondary market expands, the statement said.

GameStop Shares Surge After It Posts Surprise Profit

GameStop Corp. shares surged more than 40% after the retailer said cost cutting helped it record its first quarterly profit after seven consecutive quarters of losses.

GameStop has been working to turn around its business for close to two years under the leadership of a revamped executive team and board of directors.

Nike Sales Jump as It Works Through Inventory Glut

Nike Inc. made progress working through the inventory glut that squeezed the sneaker maker last year, reporting a 14% jump in quarterly sales and raising its revenue growth target.

The sportswear company said its inventory increased 16% in the quarter ended Feb. 28 compared with the same period a year ago. Inventories had swelled by more than 40% in each of the prior two quarters.

What to Watch From the Fed Meeting

The Federal Reserve faces on Wednesday one of its thorniest policy decisions in years: whether to lift interest rates again to fight high inflation or hold them steady amid the most intense banking crisis since 2008.

The central bank will announce its decision at 2 p.m. Eastern time in a statement. Officials are also scheduled to release new interest-rate and economic projections. Fed Chair Jerome Powell is set to answer questions from reporters at 2:30 p.m. ET.

Bank Failures Train Spotlight on Shortcomings in Risk Management

As banks and regulators scurry to respond to the most perilous industry conditions since the 2007-08 financial crisis, experts say one persistent issue needs attention: risk oversight that's not always up to the job.

Board-level risk committees at many banks have neither the clout nor the expertise to push back against corporate leadership, risk professionals say, a weakness that should be addressed in the wake of the recent bank collapses.

Apple, Microsoft Dominate U.S. Markets After FAANG Trade Fizzles

The FAANG era is apparently over. The U.S. market is dominated by just two stocks now.

U.K. Inflation Resumes Its Rise, Defying Expectations

LONDON-Britain's inflation is proving stubbornly high.

Price increases in February picked up to 10.4% from 10.1% in January as the cost of food rose at the fastest pace since records began in 1989.

North Korea Fires Off Several Cruise Missiles

SEOUL-North Korea fired several cruise missiles on Wednesday, continuing its spree of weapons tests in response to ongoing joint military drills by the U.S. and South Korea.

Several cruise missiles were fired at 10:15 a.m. local time from the northeastern city of Hamhung, the military in Seoul said. The missiles landed in waters between Korea and Japan.

Donald Trump Grand Jury to Reconvene as Potential Indictment Looms

The Manhattan grand jury investigating Donald Trump's role in a hush-money payment to a porn star is set to meet Wednesday as it comes closer to voting on a potential indictment of the former president.

The grand jury's activities have been closely watched as the hush-money investigation into Mr. Trump, run by Manhattan District Attorney Alvin Bragg Jr., nears its end. On Wednesday, jurors could hear from additional witnesses or prosecutors could formally present charges, which is the final step before the jurors vote whether to indict.

Trump Challenge Prompts Stay of Order on Lawyer's Testimony

WASHINGTON-Donald Trump is challenging a recent court decision that paved the way for federal investigators to elicit potentially crucial grand jury testimony from one of the former president's lawyers as part of the special counsel inquiry into the handling of classified documents at Mar-a-Lago.

At the request of Mr. Trump's legal team, a three-judge appeals-court panel in Washington put a temporary halt Tuesday on a sealed ruling that rejected attorney-client privilege claims raised by the former president's lawyer, Evan Corcoran, during a grand jury appearance in January. The panel of the U.S. Court of Appeals for the D.C. Circuit set extraordinarily tight deadlines for additional information and arguments, ordering Mr. Trump's lawyers to file a briefing by midnight and special counsel Jack Smith's team to respond by 6 a.m. Wednesday.

Kevin McCarthy Boasts of GOP Unity, but Tests Loom on Spending Cuts, Trump

ORLANDO, Fla.-For House Speaker Kevin McCarthy, it could be the calm before another political storm.

At House Republicans' retreat, Mr. McCarthy projected a unified picture of a party seeking conservative wins as well as bipartisanship, pointing to votes on issues related to crime and the Covid-19 pandemic. But he now heads into tough challenges that will test his leadership, including how deeply to try to cut government spending as a condition for raising the debt ceiling, as well as how to handle the re-emergence of former President Donald Trump as a center of attention in the party.

Japanese Premier Visits Kyiv as Ukraine War Divides Asia

Japanese Prime Minister Fumio Kishida held talks with Ukrainian President Volodymyr Zelensky in Kyiv on Tuesday, in a supportive visit that coincided with Chinese leader Xi Jinping's trip to Moscow and the U.S. rush to provide tanks and missile defense systems to Ukraine.

Mr. Kishida's visit to the Ukrainian capital illustrated how the war in Ukraine is affecting geopolitical alignments in Asia. It was the first by a Japanese leader since Russia invaded its neighbor in February 2022, and the first by a Japanese premier to a country at war since World War II. While Japan has supported Ukraine diplomatically and with financial aid, it hasn't provided it with lethal weapons, unlike all the other fellow members of the Group of Seven advanced economies that Tokyo currently leads, because of Japan's longstanding restrictions on arms sales.

Write to ina.kreutz@wsj.com TODAY IN CANADA

Earnings:

AGF Mgmnt 1Q

Boyd Grp 4Q

ECN Capital 4Q

Payfare 4Q

Propel Hldgs 4Q

Economic Calendar (ET):

0830 Feb New Housing Price Index

1330 Bank of Canada summary of monetary policy deliberations

Stocks to Watch:

DATA Communications Mgmt 4Q Rev C$73M; 4Q EPS C$0.08

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Dialogue Health 4Q Rev C$23.5M; 4Q Loss/Shr C$0.06; Sees 1Q Rev C$24M-C$24.5M

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K-Bro Linen 4Q Net C$280,000

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Vecima Selected by Charter Commun to Enable 10G Services Over HFC Networks

Expected Major Events for Wednesday

06:00/JPN: Feb Revised Machine Tool Orders

07:00/UK: Feb UK producer prices

07:00/UK: Feb UK monthly inflation figures

08:59/JPN: Mar Monthly Economic Report

09:30/UK: Jan UK House Price Index

10:00/ITA: Jan Balance of Payments

11:00/UK: Mar CBI Industrial Trends Survey

11:00/US: 03/17 MBA Weekly Mortgage Applications Survey

12:30/CAN: Feb New Housing Price Index

14:30/US: 03/17 EIA Weekly Petroleum Status Report

18:00/US: Federal Reserve economic projections

18:00/US: U.S. interest rate decision

All times in GMT. Powered by Onclusive and Dow Jones.

Expected Earnings for Wednesday

AGF Management Ltd - Class B (AGF.B.T) is expected to report $0.32 for 1Q.

Accord Financial (ACD.T) is expected to report for 4Q.

Aeva Technologies Inc (AEVA) is expected to report for 4Q.

Akita Drilling (AKT.A.T,AKT.B.T,AKTAF,AKTBF) is expected to report for 4Q.

Arlington Asset Investment Corp (AAIC) is expected to report $0.04 for 4Q.

Assembly Biosciences Inc (ASMB) is expected to report $-1.11 for 4Q.

Astria Therapeutics Inc (ATXS) is expected to report for 4Q.

Avalo Therapeutics Inc (AVTX) is expected to report for 4Q.

Avalon Holdings (AWX) is expected to report for 4Q.

Boyd Group Services Inc (BYD.T) is expected to report for 4Q.

Cathedral Energy Services (CET.T) is expected to report for 4Q.

Clovis Oncology Inc (CLVSQ) is expected to report $-1.72 for 4Q.

Codiak BioSciences Inc (CDAK) is expected to report for 4Q.

Cyclerion Therapeutics Inc (CYCN) is expected to report for 4Q.

Fathom Holdings Inc (FTHM) is expected to report for 4Q.

Golden Minerals (AUMN,AUMN.T) is expected to report for 4Q.

Harpoon Therapeutics Inc (HARP) is expected to report $-0.47 for 4Q.

Logistec Corp - Class A (LGT.A.T,LGT.B.T) is expected to report for 4Q.

Lyra Therapeutics Inc (LYRA) is expected to report for 4Q.

Natural Gas Services (NGS) is expected to report $-0.02 for 4Q.

Neptune Wellness Solutions Inc (NEPT,NEPT-T) is expected to report for 3Q.

NexImmune Inc (NEXI) is expected to report for 4Q.

Ollieâ tms Bargain Outlet Holdings Inc (OLLI) is expected to report $0.80 for 4Q.

Oncorus Inc (ONCR) is expected to report for 4Q.

Palisade Bio Inc (PALI) is expected to report for 4Q.

Pennsylvania Real Estate Investment Trust (PRET) is expected to report for 4Q.

Peraso Inc (PRSO) is expected to report for 4Q.

Petco Health & Wellness Co Inc (WOOF) is expected to report for 4Q.

Quarterhill Inc (QTRH,QTRH.T) is expected to report $-0.07 for 4Q.

Reading International Inc (RDI) is expected to report $0.10 for 4Q.

Shoe Carnival (SCVL) is expected to report $0.78 for 4Q.

Spectrum Pharmaceuticals (SPPI) is expected to report $-0.11 for 4Q.

Talaris Therapeutics Inc (TALS) is expected to report for 4Q.

Tattooed Chef Inc (TTCF) is expected to report for 4Q.

Terns Pharmaceuticals Inc (TERN) is expected to report for 4Q.

Travelzoo (TZOO) is expected to report for 4Q.

TuSimple Holdings Inc (TSP) is expected to report for 4Q.

US Global Investors (GROW) is expected to report for 2Q.

Wilhelmina International Inc (WHLM) is expected to report for 4Q.

Winnebago Industries Inc (WGO) is expected to report $1.19 for 2Q.

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ANALYST RATINGS ACTIONS

Agree Realty Cut to Market Perform From Market Outperform by JMP Securities

Armstrong World Cut to Hold From Buy by Deutsche Bank

Assurant Raised to Outperform From Market Perform by Keefe, Bruyette & Woods

Athenex Cut to Neutral From Buy by Ladenburg Thalmann

Cyclo Therapeutics Cut to Hold From Buy by Maxim Group

Emerson Electric Raised to Overweight From Equal-Weight by Morgan Stanley

FleetCor Raised to Outperform From Market Perform by Raymond James

Foot Locker Raised to Buy From Neutral by Citigroup

Foot Locker Raised to Outperform From In-Line by Evercore ISI Group

Foot Locker Raised to Outperform From Market Perform by Telsey Advisory Group

GoDaddy Cut to Neutral From Overweight by Piper Sandler

Harley-Davidson Raised to Overweight From Equal-Weight by Morgan Stanley

Meta Platforms Raised to Overweight From Equal-Weight by Morgan Stanley

Nvidia Raised to Neutral From Underperform by Exane BNP Paribas

NY Community Bancorp Raised to Buy From Hold by DA Davidson

Oak Street Health Cut to Peer Perform From Outperform by Wolfe Research

Oric Pharmaceuticals Cut to Neutral From Buy by Guggenheim

Range Resources Raised to Buy From Hold by Tudor Pickering

Vornado Raised to Neutral From Underweight by Piper Sandler

This article is a text version of a Wall Street Journal newsletter published earlier today.

(END) Dow Jones Newswires

March 22, 2023 06:18 ET (10:18 GMT)

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