Dow down 200 points and Nasdaq Composite off 1% as Russia-Ukraine tensions buffets sentiment

Losses for U.S. stock benchmarks were picking up near midday as investors monitored developments between Russia and Ukraine, harboring fears of a war breaking out.

Bond yields and the dollar were little changed, while gold slipped.

U.S. markets will be closed on Monday in observance of Presidents Day.

How are stock benchmarks performing?
  • The Dow Jones Industrial Average

    was trading 214 points, or 0.7%, lower at 34,090.

  • S&P 500 index

    was 26 points, or 0.6%, lower at 4,353, with consumer discretionary

    and energy sectors
    the worst performers among the index’s 11 sectors.

  • The Nasdaq Composite Index

    trades 130 points, or about 1%, lower at 13,583. A so-called death cross crystallized in the index, a bearish chart pattern.

  • For the week, the Dow is down 1.8%, the S&P 500 is headed for a 1.5% slide and the Nasdaq Composite was on track for a 1.6% decline.

On Thursday, the Dow dropped 622.24 points, or 1.8%, to close at 34,312.03, its largest one-day point and percentage drop since Nov. 30. The S&P 500

slumped 94.75 points, or 2.1%, to finish at 4,380.26. The Nasdaq Composite

tumbled 407.38 points, or 2.9%, to finish at 13,716.72. Losses for the S&P 500 and Nasdaq were the largest since Feb. 3.

What is driving the market?

Renewed fears of a Russian invasion of Ukraine undercut some bullish momentum in markets for buyers on Friday.

President Joe Biden is scheduled to speak at 4 p.m. Eastern Time on the U.S.’s “continued efforts to pursue deterrence and diplomacy, and Russia’s buildup of military troops on the border of Ukraine,” the White House said Friday. Diplomatic efforts aimed at heading off an invasion remained in focus, with Biden also expected to speak with European leaders.

Concerns about conflict have intensified after U.S. and NATO officials said evidence on the ground showed Russia had increased troop levels near Ukraine’s borders despite Moscow announcing earlier in the week that some units were pulling back, while Biden has said the probability of an attack in coming days remains high.

Read: Here’s the technology being used to watch Russian troops as Ukraine invasion fears linger

U.S. State Department spokesman Ned Price said late Thursday that U.S. Secretary of State, Antony Blinken, and Russian Foreign Minister Sergei Lavrov would meet late next week, “provided there is no further Russian invasion of Ukraine,” according to news reports.

Blinken said Friday that he is “deeply concerned” that Russia isn’t embarked on the path of diplomacy and that Russia appears to be creating false provocations in Ukraine designed to spark a conflict with Ukraine.

U.S. equity futures had edged up overnight after Lavrov agreed to meet Blinken.

Benchmark U.S. stock indexes are heading for a second week of losses, undermined by the standoff between Russia and the West over Ukraine, as well as the prospect of tighter Federal Reserve monetary policy. Some $2.2 trillion of U.S. stock options are set to expire Friday also, and may exacerbate volatility. 

Bets on a sharper Fed interest-rate rise in March eased somewhat in light of the threat of military conflict, but investors remained concerned by the question of how markets will cope as fiscal and monetary stimulus ebbs.

St. Louis Federal Reserve President James Bullard, who has called for more aggressive rate increases than his colleagues, on Thursday said too much “mindshare” has been devoted to the idea that inflation will moderate at some point.

On Friday, president of the New York Federal Reserve, John Williams, said it would be “appropriate” to raise the central bank’s benchmark short-term interest rate in March and begin to reduce its $9 trillion stockpile of bonds “later this year.”

Also on Friday, Chicago Fed President Charles Evans said he sees no need for extra restrictive rate hikes, which triggered past recessions, in remarks to the U.S. Monetary Policy Forum.

In U.S. economic data, existing-home sales increased by nearly 7% between December and January, hitting a seasonally-adjusted, annual rate of 6.5 million, the National Association of Realtors said Friday. Economists polled by MarketWatch expected the pace of home sales to come in at 6.1 million.

Separately, an index of leading economic indicators for the U.S. fell 0.3% in January on surging omicron cases, high inflation and persistent supply-chain disruptions. The decline in the index was the first since last spring. Wall Street had expected a small increase. The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.

Which companies are in focus?
  • Roku Inc.

    reported earnings Thursday that topped Wall Street forecasts but fourth-quarter revenue that didn’t. The company also warned of continuing supply-chain disruptions. Shares were down around 24%.

  • Shares of DraftKings Inc.

    were down 17% on Friday as the online betting company’s upbeat forecast on profitability in 2023 was overshadowed by a wider-than-expected projected loss in 2022 as competition in online sports gambling intensifies.

  • Shares of Ford Motor Co.

    rise amid reports that it is considering separating its electric-vehicle operation from its legacy car and truck manufacturing, a move seen boosting its competitiveness against singularly EV-focused makes such as Tesla Inc.
    according to a Bloomberg News report Friday. Shares of Ford are up 2.4% and those for Tesla are down 3.4%.

How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y rose over 4 basis points to 1.93%. Yields and debt move opposite prices.

  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, edged up 0.3%.

  • Oil futures fell, with the U.S. benchmark CL.1 was off 0.7% to trade at $89.36 a barrel on the New York Mercantile Exchange. Gold futures GC00 fell 0.3% at $1,895.70 an ounce, hovering around its highest price since June.

  • The Stoxx Europe 600 SXXP closed 0.8% lower and booked a 1.9% weekly slump, while London’s FTSE 100 UKX finished 0.3% lower on Friday, contributing to a 1.9% weekly decline .

  • The Shanghai Composite SHCOMP rose 0.7% and booked a 0.8% weekly advance, while the Hang Seng Index HSI declined 1.9% in Hong Kong, with a 2.3% drop for the week, and Japan’s Nikkei 225 NIK fell 0.4% on the session, and fell 2.1% on the week.

Source link