THE WEEK ON WALL STREET+
Investors rode a rollercoaster of emotions as rising hostilities at the Russian-
Ukrainian border sent stocks sharply lower before a powerful late-week rally erased
early losses. The Dow Jones Industrial Average was flat (-0.06%), while the
Standard & Poor’s 500 edged higher by 0.82%. The Nasdaq Composite index gained
1.08% for the week. The MSCI EAFE index, which tracks developed overseas stock
markets, lost an eye-catching 5.72%.
The build-up to Russia’s eventual invasion of Ukraine triggered elevated market
volatility, resulting in broad-based selling that sent the S&P 500 into correction
territory as the holiday-shortened week of trading began. The sell-off culminated on
Thursday morning following the overnight incursion of Russian troops into
Ukrainian territory, though markets staged a powerful late-day recovery that
coincided with President Biden’s announcing fresh sanctions against Russia. The
afternoon rebound was remarkable, as the S&P 500 ended 1.5% higher after being
down more than 2.6%, while the Nasdaq Composite closed 3.3% higher after
dropping nearly 3.5% intraday. Thursday afternoon’s momentum continued into
Friday as stocks rallied to end the week in positive territory.
Setting aside the more important aspects of the human cost and damage to world
order, Russia’s invasion of Ukraine introduced an acute layer of uncertainty into
many layers of the financial markets. The immediate repercussion was the impact
on global economic recovery due to rising energy prices, which reduce consumers’
discretionary spending and saddle businesses with higher costs. The inflationary
impact of higher energy and other prices, along with the prospect of decelerating
economic growth, also complicates the Fed’s strategy to guide interest rates higher.
Already, the probability of a 50 basis point interest rate hike at the Fed’s March 2022
meeting seems less likely than it was just a week ago. Finally, Russia’s actions have
raised new concerns over second-order effects that could further unsettle markets,
such as a new round of supply-chain disruptions.
Tuesday: ISM (Institute for Supply Management) Manufacturing Index.
Wednesday: ADP (Automated Data Processing) Employment Report.
Thursday: Factory Orders. Jobless Claims. ISM (Institute for Supply Management)
Friday: Employment Situation.
Monday: Lucid Group, Inc. (LCID), Zoom Video Communications, Inc. (ZM).
Tuesday: Salesforce.com, Inc. (CRM), Target Corporation (TGT), Ross Stores, Inc.
Wednesday: Dollar Tree, Inc. (DLTR), Snowflake, Inc. (SNOW).
Thursday: Broadcom, Inc. (AVGO), Costco Wholesale Corporation (COST), Best
Buy Co., Inc. (BBY), Marvell Technology, Inc. (MRVL), The Kroger Company (KR).
The situation with Russia and Ukraine is certainly unnerving and lots of rhetoric
gets tossed around in times like these. I find it is best to control what you can
control. As investors, this is typically our attitude and behavior. We must keep in
mind that while economic sanctions against Russia could spill over into other areas
in the short-term, the U.S. economy is still strong and we don't depend on Russia
and Ukraine for much of our GDP. Sure, the thought of any war and the worst case
scenario repercussions are always scary. Most of the time, the worst case scenario
doesn't play out and we are left having done a lot of mental gymnastics for no reason.
and political jockeying is the news du jour. It may just turn out the worst of all these
situations do not become reality. Keep in mind a little more than eighty years ago
the scenes of families and neighbors huddling in Subway cars to avoid aerial attacks
and rockets were not occurring in Kyiv and Kharkiv but in London, England.
However, the market bottomed in June 1940 before the Blitz began. British stock
markets were able to go up through all those military defeats and the ruinous
bombing of their urban centers.
THIS WEEK'S UPDATE
March 01, 2022|