U.S. stocks closed lower on Friday, with all three major benchmarks posting a second week of losses, as investors watched developments between Russia and Ukraine amid war fears.
How have stock indices performed?
The Dow Jones Industrial Average DJIA,
fell 232.85 points, or 0.7%, to close at 34,079.18.
S&P 500 SPX Index,
fell 31.39 points, or 0.7%, to end at 4,348.87, with information technology SP500EW.45,
worst performer among the 11 sectors in the index.
The Nasdaq COMP composite index,
fell 168.65 points, or 1.2%, to end at 13,548.07. A so-called death cross has crystallized in the index, a bearish chart pattern.
For the week, the Dow Jones fell 1.9%, the S&P 500 1.6% and the Nasdaq 1.8%.
On Thursday, the Dow Jones fell 622.24 points, or 1.8%, to close at 34,312.03, its biggest one-day point and percentage drop since Nov. 30. The S&P 500 SPX,
fell 94.75 points, or 2.1%, to end at 4,380.26. The Nasdaq Composite COMP,
fell 407.38 points, or 2.9%, to end at 13,716.72. The S&P 500 and Nasdaq losses were the largest since Feb. 3.
What drove the market?
Renewed fears of a Russian invasion of Ukraine added to weekly market losses for buyers on Friday.
“The geopolitical headlines surrounding Ukraine’s tensions with Russia and the rest of the world across the West have clearly had an impact on investor sentiment,” said Kei Sasaki, senior investment portfolio manager at Northern Trust. Wealth Management, in a phone interview Friday. Geopolitical events are “very difficult” to predict, he said, with continued “anxiety” about the possibility of a Russian attack on Ukraine.
President Joe Biden is scheduled to speak at 4 p.m. Eastern Time about “continued U.S. efforts to pursue deterrence and diplomacy, and the buildup of Russian military troops on Ukraine’s border,” the announcement said. the White House on Friday. Diplomatic efforts to prevent an invasion remained the focus, with Biden also set to hold talks with European leaders.
Concerns over the conflict intensified after US and NATO officials said evidence on the ground showed Russia had increased troop levels near Ukraine’s borders despite Moscow announcing more earlier in the week that some units were withdrawing, while Biden said the likelihood of an attack in the coming days. remains high.
Read: Here’s the tech used to monitor Russian troops as Ukraine invasion fears linger
US State Department spokesman Ned Price said on Thursday evening that US Secretary of State Antony Blinken and Russian Foreign Minister Sergey Lavrov would meet at the end of next week, “provided there is no more Russian invasion of Ukraine”. according to reports.
Blinken said on Friday he was “deeply concerned” that Russia is not going down the path of diplomacy and that Russia appears to be creating false provocations in Ukraine designed to spark conflict with Ukraine.
US stock futures had risen slightly overnight after Lavrov agreed to meet with Blinken.
US stocks were hurt for a second week by the standoff between Russia and the West over Ukraine, as well as the prospect of tighter monetary policy from the Federal Reserve.
Northern Trust’s Sasaki said he was looking for buying opportunities amid investor knee-jerk reactions to the headlines surrounding Ukraine, with a preference for higher quality stocks in developed markets. Geopolitical tensions, so far, have not changed his fundamental views on inflation or the prospect of a rate hike, which have been fundamental issues for the market, he said.
Bets on a steeper Fed interest rate hike in March eased somewhat given the threat of military conflict, but investors remained concerned about how markets will react to the decline in fiscal and monetary stimulus.
St. Louis Federal Reserve Chairman James Bullard, who has called for more aggressive rate hikes than his colleagues, said Thursday that too much “mindshare” had gone into the idea that the inflation would moderate at some point.
On Friday, New York Federal Reserve Chairman John Williams said it would be “appropriate” to raise the central bank’s benchmark short-term interest rate in March and start cutting its stockpile. $9 trillion bond “later this year”.
Also on Friday, Chicago Fed Chairman Charles Evans said he saw no need for further restrictive rate hikes, which have triggered past recessions, in remarks at the US Monetary Policy Forum. .
According to U.S. economic data, sales of existing homes rose nearly 7% between December and January, reaching a seasonally adjusted annual rate of 6.5 million, the National Association of Realtors said on Friday. Economists polled by MarketWatch expected the pace of home sales to hit 6.1 million.
Separately, an index of leading U.S. economic indicators fell 0.3% in January due to surging omicron cases, high inflation and continued supply chain disruptions. The drop in the index was the first since last spring. Wall Street expected a slight rise. The LEI is a weighted gauge of 10 indicators designed to signal peaks and troughs in the business cycle.
Major economic indicators “disappointed this morning,” Sasaki said. He expects US economic growth to “remain positive” this year, but to be slower and “more sustainable”.
The market should do “very well” in 2022, even with the expected rate hikes from the Fed, as stocks will be supported by “positive earnings growth”, according to Steven Violin, portfolio manager at FLPutnam Investment Management Company.
As for opportunities to buy U.S. equities, the shift to growth value “is pretty well advanced,” Violin said in a phone interview Friday. “Some growth stocks have fallen enough to become attractive,” he said, “and some value stocks have risen enough to become unattractive.”
iShares S&P 500 Growth ETF IVW shares,
are down around 13.5% this year, while iShares S&P 500 Value ETF IVE,
fell about 3.2%, according to FactSet.
In Violin’s view, “there seems to be a lot more avenues for value stocks outside of the United States.”
Which companies were targeted?
reported earnings on Thursday that beat Wall Street forecasts, but not fourth-quarter revenue. The company also warned of continued supply chain disruptions. The shares fell about 22.3%.
Shares of DraftKings Inc.
fell 21.6% as the online betting company’s optimistic forecast of profitability in 2023 was overshadowed by a larger-than-expected projected loss in 2022 as competition in online sports betting intensifies .
Shares of Ford Motor Co.
rose 2.9% as it considered splitting its electric vehicle business from its legacy car and truck manufacturing, a move that bolsters its competitiveness against singularly EV-focused brands such as Tesla Inc.. TSLA,
according to a Bloomberg News report on Friday. Tesla shares fell 2.2%.
How have other assets performed?
The yield on the 10-year Treasury note TMUBMUSD10Y fell 4.2 basis points on Friday to 1.93%. For the week, the yield fell 2.1 basis points. Yields and debt move inversely to prices.
The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, edged up 0.3%.
Oil futures fell, with West Texas Intermediate crude for March delivery CL.1 slipping nearly 0.8% to settle at $91.07 a barrel. The contract for the first month of March posted a weekly loss of 2.2%.
GC00 gold futures for April delivery slid 0.1% to $1,899.80 an ounce. For the week, gold rose 3.1% for its biggest weekly gain since May 2021.
The Stoxx Europe 600 SXXP closed down 0.8% and posted a weekly decline of 1.9%, while London’s FTSE 100 UKX ended down 0.3% on Friday, contributing to a weekly decline of 1.9%.
In Asia, the Shanghai Composite SHCOMP rose 0.7% and posted a weekly gain of 0.8%. The Hang Seng HSI index fell 1.9% in Hong Kong for a decline of 2.3% on the week. The Japanese Nikkei 225 NIK fell 0.4% during the session for a weekly decline of 2.1%.
––Clive McKeef contributed to this article.