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Federal Reserve prepares for new round of bank stress tests

Yahoo Finance's Jared Blikre joins The First Trade with Alexis Christoforous to discuss how tech shares are faring in pre-market trading on Friday. Blikre also shares what we can expect from the Fed's new round of bank stress tests.

Video Transcript

ALEXIS CHRISTOFOROUS: Tech stocks looking to rebound here after another big sell-off yesterday. Taking a look at stock futures, they have turned green across the board here just recently. Dow futures up 11.

We've got NASDAQ futures, big winner this morning, up 61 points, a gain there of about half a percent. S&P futures up 8 points. Want to bring in Jared Blikre here because, Jared, we saw investors dumping the big name tech stocks yesterday, Apple, Amazon, Facebook. They're a little bit higher today. Where does tech stand at the moment?

JARED BLIKRE: Yeah. This is a reversal from the last two days. Some pretty heavy losses Wednesday and Thursday. Let's look at the NASDAQ 100, and we can see the premarket quotes here.

Facebook, which was down over 3% yesterday, is up 1.6% this morning. Amazon and Microsoft each up better than half a percent here along with Apple. But I'm gonna get rid of the premarket quotes and show you what's happened over the last two days.

We can see Facebook down 6.5% and here. Amazon down nearly 5%. Apple down over 4% along with Nvidia and Adobe. And that's accounted for a lot of these losses we've seen in the NASDAQ.

The Dow has fared a bit better. And this is important to point out because certain-- certain sectors within the Dow that it overrepresents haven't sold off as much or have actually been gaining. So I'm gonna show you the last 10 days right now. And 10 days corresponds to the S&P 500 all-time high, the most recent one we had 10 days ago.

And you can see the losses are very steep here for the big caps. Apple down 16%. Facebook almost there with it. Amazon down 15%.

But if we look at what's happened in the sector action over the last 10 days, we can see only materials. That's XLB in the upper left-hand corner. That is green. That's up 1% since market

Everything else is in the red. And to the bottom right, XLK has sold off the most. That's tech, down 10% followed by communication services.

And then we have the S&P down 6.3%. So only tech and communications services are actually underperforming the market right now. And we do have some sectors that are in the green over this time period.

You can look at travel. We can see a lot of these airlines-- Delta, for instance-- is up 9% since we had that low. We can also take a look at the transports.

FedEx is up 7% here. It led the transports to a record high, first one in several years, only a couple days ago. So we do have these pockets of strength here.

ALEXIS CHRISTOFOROUS: You know, I also want to point out that high flying newcomer, Snowflake, which more than doubled in its Wall Street debut on Wednesday, pulled back yesterday, down about 10%. Up, though, here about 2% in the premarket. And we're gonna be speaking with the CEO of Snowflake, Frank Slootman, in the next half hour.

Before we let you go, Jared, want to talk to you about the Fed gearing up for a new round of bank stress tests. What can you tell us? And when is this going to happen?

JARED BLIKRE: Yes. The Fed is considering whether it's going to put on hold plans for banks to be able to resume share buybacks that are currently barred throughout the-- through the end of the third quarter and whether they're going to be able to increase their dividends. Currently, they're capped at whatever the second quarter levels are.

The Federal Reserve is facing a lot of criticism from Congress and other groups because a lot of people don't think that banks should be distributing their capital in the midst of a pandemic. And so in the premarket here, really not a lot of action in the banks. We can see JP Morgan and Bank of America down just slightly.

Citigroup is up slightly. Morgan Stanley up about 12 basis points. The only one really moving here is Goldman Sachs, which is up 4/10 of a percent. So really not having too big profound an influence on the price action here this morning, Alexis.