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Investing.com — PacWest unveils a deposit flight, while a key meeting of debt ceiling negotiators is postponed. Elsewhere, Elon Musk hints that he may have found his replacement at the helm of Twitter and the U.K. economy expands slightly in the first quarter.
1. PacWest withdrawals climb
Shares in PacWest (NASDAQ:PACW) inched slightly higher in premarket trading on Friday, paring back a small portion of a sharp loss posted in the prior session that was sparked by an announcement from the lender that its deposits had shrunk by about 10% in the first week of May.
It is the latest bout of bad news out of PacWest. The California-based bank has been one of the institutions at the center of recent turmoil surrounding midsize U.S. financial services firms since the collapse of Silicon Valley Bank in March.
Earlier this month, PacWest said that it is exploring its strategic options, including a possible sale of the company. According to a regulatory filing from PacWest, this statement led to a spike in withdrawals that helped bring the bank’s deposits down by 9.5% from $28 billion on May 2.
Shares in PacWest subsequently shed more than a fifth of their value, deepening their decline over the past one-year period to nearly 85%.
2. Futures rise with Fed rate path in focus
U.S. stock futures are pointing higher on Friday, as investors made bets on whether fresh inflation and job market data will persuade the Federal Reserve to push pause on its policy tightening campaign.
At 05:14 ET (09:14 GMT), the Dow futures contract was up 157 points or 0.47%, S&P 500 futures traded higher by 19 points, or 0.45%, and the Nasdaq 100 futures climbed 37 points or 0.28%.
Aiding sentiment were figures unveiled on Thursday that showed that producer price growth in the U.S. eased to its slowest level in over two years, while jobless claims rose to their highest mark since October 2021.
Corralling inflation and cooling the labor market have been of the key objectives of the Fed’s unprecedented and long-running series of interest rate hikes. With this week’s latest batch of economic data suggesting that the spike in borrowing costs may be having the desired impact, expectations are growing that policymakers could bring the era of rate increases to an end at its next policy meeting in June.
3. Debt ceiling talks postponed
Here’s one potential complication for the Fed’s rate calculus: The ongoing political standoff over the U.S. debt limit has both executives on Wall Street and officials in Washington warning of a “catastrophic” default potentially early next month.
The negotiations remain fraught, with the White House and Republican leaders at odds over federal spending plans.
On Thursday, lawmakers pushed back a meeting of the big players – that is, U.S. President Joe Biden, House Speaker Kevin McCarthy and several other top Congressional names – that was originally set for today. A Biden administration spokesperson said the leaders have now agreed to meet early next week, adding that their aides would continue working behind the scenes.
The clock, however, is ticking.
4. Musk says he’s found a new Twitter CEO
Elon Musk may be on the verge of relinquishing some control over Twitter, according to multiple media reports.
The Wall Street Journal and the Financial Times both say that Musk is in talks with NBCUniversal’s advertising head Linda Yaccarino over becoming the new chief executive of the billionaire’s social media company.
In typically cryptic fashion, Musk tweeted on Thursday that he had “hired a new CEO for X/Twitter” but refrained from naming the person. He only added that “[s]he will be starting in ~6 weeks.”
Yaccarino and Musk were recently seen together on stage at an event in Miami. Quoting sources familiar with the matter, the FT said the two got along well, while Yaccarino also showed “a flair for showmanship.”
5. Britain eeks out quarterly growth
The U.K. economy expanded slightly in the first quarter despite a string of strikes that hampered activity in March.
Gross domestic product in the opening three months of 2023 rose by 0.1% on a quarterly basis, according to data from the Office for National Statistics on Friday. The figure was unchanged from the fourth quarter and matched economists’ estimates.
Growth was revised upward in March, but this was partly offset by decreases in the services sector in March when hundreds of thousands of British workers downed tools to call for improved pay and conditions. Output declined by 0.3% during the month compared to February.
The three-month number managed to top projections from the Bank of England, which had expected it to remain flat in the first two quarters of 2023. Even still, Britain is still lagging behind its Group of Seven peers.
Source: Investing.com
