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) Services Index. Friday: Employment Situation. Monday: Lucid Group, Inc. (LCID), Zoom Video Communications, Inc. (ZM). Tuesday: Salesforce.com, Inc. (CRM), Target Corporation (TGT), Ross Stores, Inc. (ROST). 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.
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THIS WEEK'S UPDATE
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March 01, 2022
