NEW YORK, March 23 ― Wall Street was set to open higher today after the Federal Reserve hinted it was close to pausing interest rate hikes amid a turmoil in the banking sector that threatens to cause a severe economic downturn.

The Federal Reserve yesterday raised rates by an expected 25 basis points, but its policy statement no longer said “ongoing increases” would likely be appropriate, indicating a clear shift in its stance.

The central bank's softer tone relieved markets that have been roiled by concerns about a liquidity crisis in the banking sector since the failure of two US regional lenders earlier this month.

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Wall Street's main indexes had closed sharply lower yesterday after Fed Chair Jerome Powell said the central bank was still intent on fighting inflation even as he flagged credit issues due to banking troubles could have “significant” implications for the economy.

“The impression given by Powell has taken away any hopes the market had that we might get some cut in interest rates later this year,” said Stuart Cole, head macro economist at Equiti Capital.

“It seems that the message that the central banks have been giving to date, that returning inflation to target is their number one priority is very much still the message that they're going to deliver despite the banking failures.”

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Traders' bets are almost equally split between the Fed pausing its rate hikes in May and another 25 bps hike, according to CME Group's Fedwatch tool.

Bank of America and UBS now see the Fed funds rate target peaking at 5-5.25 per cent in May compared to earlier forecasts of 5.25-5.5 per cent.

While US Treasury yields slipped on growing hopes of an end to the Fed's tightening cycle, major growth stocks such as Apple Inc, Microsoft and Amazon.com jumped above 1 per cent premarket.

Troubled regional lender First Republic Bank rose 7.9 per cent after slumping yesterday following Treasury Secretary Janet Yellen's remark that there was no discussion on insuring all bank deposits.

PacWest Bancorp and Western Alliance Bancorp gained 4.4 per cent and 5.3 per cent respectively.

Meanwhile, data showed signs of strength in the labour market, with jobless claims falling to 191,000 last week from the week prior, against expectations that the number would rise to 197,000.

At 8.41am ET, Dow e-minis were up 55 points, or 0.17 per cent, S&P 500 e-minis were up 20.25 points, or 0.51 per cent, and Nasdaq 100 e-minis were up 120.25 points, or 0.95 per cent.

Shares of Block Inc fell 19.7 per cent premarket after Hindenburg Research said it held short positions in the Jack Dorsey-led payments firm.

Among other stocks, Nvidia Corp rose 2.5 per cent after Needham raised its price target on the chipmaker on likely benefit from near-term data center strength.

Coinbase Global Inc slid 14.4 per cent after the US Securities and Exchange Commission (SEC) threatened to sue the crypto exchange over some of its products.

Regeneron Pharmaceuticals Inc jumped 8.2 per cent on promising results on its blockbuster asthma drug Dupixent from a lung disease trial.

Accenture Plc rose 3.1 per cent after the company said it would cut about 2.5 per cent of its workforce, or 19,000 jobs. ― Reuters