Fears that more problems could be found in the banking sector have cast a cloud of worry over the market that will not be easily shaken. In the coming weeks, the Federal Reserve has a chance to weigh in. After Tuesday’s and Wednesday’s meetings, the central bank may raise the fed funds rate by another quarter point. It is expected to release new quarterly projections for the economy, including forecasts for inflation and interest rates. Futures markets on Friday put the probability of a quarterly rate hike from the central bank at about 70%. “It’s a close call for next week because it really depends on what the market has done when the Fed meets. This is a fluid situation,” said Ethan Harris, head of global economic research at Bank of America. BofA expects the Fed to raise rates by 25 basis points Wednesday, as does JP Morgan. But Goldman Sachs economists expect the Fed to pause. A basis point is equal to 0.01 of a percentage point. “If there is no bank failure, and we look at Monday and Tuesday and the banking stocks are more stable, then it can move, but it will be a very close call. Our house view will stop,” said George Goncalves, head of US macro strategy at MUFG. Since the spectacular and swift failure of Silicon Valley Bank on Friday followed by Signature Bank, investors have been fearful about the health of other small and regional banks. The government last weekend agreed to backstop depositors at Silicon Valley Bank and Signature Bank, which closed over the weekend. First Republic Bank has become a regional sales center. On Thursday, a consortium of banks stepped in to put $30 billion into First Republic, but the stock continued to be slammed along with other regional banks on Friday. “It’s one of the great things that an ambulance comes to our house so quickly. The bad news is that we need an ambulance,” said Art Hogan, chief market strategist at B. Riley Financial. “Everybody’s moving to these banks, and the bad news is the banks have to do it. … We still have more questions than answers.” Some strategists expect the stock to remain very strong and may test its lows in October. .SPX 1Y line stx “It will not surprise me if the market does not retest and blow through the bottom of October, but that is different from saying ‘we are out of the woods, that is below,'” said Liz Ann Sonders, Charles Schwab chief investment strategist. “I think it’s still going to be pretty choppy. The good news from a pricing perspective is that the Fed is done or almost done.” Even with Friday’s selloff, the S&P 500 and Nasdaq posted gains for the week. The S&P 500 rose 1.4%, compared with a small loss of 0.2% in the Dow. The Nasdaq rose 4.4% for the week, as big tech, like Apple, Microsoft and Alphabet, attracted investors. Play safety According to Todd Sohn of Strategas, the two biggest stocks – Apple and Microsoft – are a record 13.5% of the S&P 500 market cap on Friday morning. As other stocks traded, Apple gained 4.4% for the week, and Microsoft and Alphabet were both 12.5% higher. AAPL MSFT 1Y line tec “He’s being considered a safety right now,” Sohn said. “It is rare to have shares alone have a weight of more than 6%.” Schwab’s Sonders says buying in Big Tech is a flight-to-safety in the sector. “Big Tech a year ago looked pretty bad just because the valuations were so stretched. There was carnage there. Valuations are more reasonable, but they are not cheap,” she said. He said there is still a lot going on from Silicon Valley Bank, which has many startups and technology companies among its borrowers and depositors. “I think there’s a capital flight to tech stocks that are well capitalized, they’re safe havens,” he said. Peter Boockvar, chief investment officer at Bleakley Financial Group, says the technology name may be overdone. “Technology will be good if customers are good,” he said. “If the U.S. economy goes into recession, they will buy less cloud services. They will buy less software. People buy these big name technology caps, and they don’t think about it. ” Economists expect loans by banks, especially regionally, will be tight, and may help push the economy into recession. “I just don’t think people appreciate the accident that happened here. You lose the impetus of regional banks to lend to the same extent as before. Regional banks make up almost 40% of bank loans,” he said. “Local restaurants looking to open two new locations won’t borrow from Goldman Sachs. What else to watch There’s some data to watch next week, especially existing home sales and new home sales Thursday. , durable goods for February reported, and there is a release of S&P Global PMI flash data for services and manufacturing. Treasury Secretary Janet Yellen testified before congressional committees on Wednesday and Thursday about the fiscal 2024 budget, and she will be watched for any comments. on the financial system.. Fed President St Louis James Bullard is the first Fed official scheduled to speak after Fed Chairman Jerome Powell’s post-meeting briefing on Wednesday afternoon Bullard said at 9:30 ET. week. However, the swings are in both directions. The 2-year yield rose from above 5% earlier week, to below 4%. It is at 3.82%. Ng yields move opposite bond prices. Line note US2Y 1Y According to Bespoke, the yield on the 2-year note has moved 20 basis points or more for six straight days, the longest record since at least 1977. already in the banking system and worries about a recession. “With the Fed’s program, hopefully cooler heads will prevail.” Next week’s calendar Monday 10:00 a.m. Quarterly financial report Tuesday FOMC begins meeting 10:00 a.m. Home sales on Wednesday 2:00 pm FOMC statement and projections 2:30 pm Fed Chairman Jerome Powell briefing Thursday 8:30 am Initial claims 10:00 am New home sales Friday 8:30 am Durable goods 9:30 am St. Louis Fed President James Bullard 9 :45 am S&P Global Manufacturing PMI 9:45 am S&P Global Services PMI