Week 11 in Brief
- U.S. stocks closed higher Friday, as markets registered news that the Federal Reserve will raise interest rates and uncertainty over the Russia-Ukraine war.
- The market remains volatile as investors struggle to forecast economic growth and corporate profitability amid high inflation, rising interest rates from central banks around the world, Russia’s invasion of Ukraine, and ongoing lockdowns to combat Covid-19 in China and Europe.
How did the major indices perform?
- The Dow Jones Industrial Average rose 274.17 points, or 0.8%, to close at 34,754.93, leaving the blue-chip gauge up 5.5% for the week.
- The Nasdaq Composite jumped 279.06 points, or about 2%, to end at 13,893.84, also snapping two straight weeks of declines and logging a weekly advance of 8.2%.
- The S&P 500 Index gained 51.45 points, or 1.2%, to finish at 4,463.12, snapping two straight weeks of losses. For the week, the S&P 500 rose 6.2%.
What drove the US market?
- Volatility: Stocks ended higher, climbing in a choppy session that had opened with all three major U.S. benchmarks down, as investors weighed hawkish comments from Federal Reserve officials and assessed ramifications of the Russia-Ukraine war. Weekly percentage gains for all three major indexes were the strongest since the week ended Nov. 6, 2020.
- Evidently, the market can shake off the near-term implications of unprecedented sanctions on Russia and a hawkish turn by the Fed by focusing on the longer-term realities of hopeful post-pandemic reopening growth, very low unemployment, and yet-to-be-cut-meaningfully continued earnings growth forecasts.
- Interest Rate Hike: Investors weighed hawkish comments from central bankers. At its meeting this week, the Fed increased benchmark interest rates by 25 basis points as expected, promising more, with Fed Chairman Jerome Powell cheering investors with an optimistic view of the economy. U.S. data for Friday included existing home sales and leading indicators, both for February.
- Geopolitics: Investors had also been encouraged by signs of potential progress between Ukraine and Russian negotiators, but those hopes were fading some ahead of the weekend. U.S. Secretary of State Antony Blinken reportedly said in a briefing Thursday that a diplomatic solution to the war in Ukraine was looking challenging, as Russia shows no signs of letting up its attacks.
- Chinese President Xi Jinping told U.S. President Joe Biden during a Friday phone call on the Ukraine crisis that the world’s prevailing trend of peace and development is facing serious challenges, according to a report from Xinhua, a Chinese state-run news agency. Biden warned Xi of “consequences” should China provide material support to Russia as it brutally attacks Ukraine, according to a White House statement.
- Market Correction: Friday’s session marked a “massive” quarterly options expirations, an event known as triple-witching.
Which US stocks were in focus Friday?
- FedEx Corp. reported a weaker-than-forecast fiscal third-quarter result and kept its annual outlook mostly unchanged. Shares fell 4%.
- Meme-stock videogame retailer GameStop Corp. swung to a surprise loss in the fourth quarter. Shares rose 3.5%.
- Moderna Inc. shares climbed 6.3% after the pharmaceutical group asked the Food and Drug Administration on Thursday to authorize a fourth shot of its COVID-19 vaccine as a booster dose for all adults.
- Boeing gained 1.3% after Reuters reported the company is in talks with Delta Air Lines for a landmark order of 737 MAX 10 jets.
How did the European markets perform?
- European stocks closed higher on Friday with investors largely making cautious moves amid worries about Russia-Ukraine conflict. Investors also continued to weigh the near-term impact of the recent monetary policy announcements from the Federal Reserve and the Bank of England.
- The pan European Stoxx 600 climbed 0.91% today, and closed the week with a 5.2% gain, its best weekly performance since the week ended November 6, 2020.
- The U.K.’s FTSE 100 gained 0.28%, France’s CAC 40 moved up 0.17% and Germany’s DAX advanced 0.12%, while Switzerland’s SMI surged up 1.02%.
- In the UK market, Ocado Group surged up 7.6%. Entain climbed 4.4%, while Kingfisher and Berkeley Group Holdings moved up 3.3% and 3.1%, respectively.
- In economic news, data from Eurostat showed the eurozone trade deficit narrowed in January to EUR 7.7 billion from EUR 9.7 billion in December. The trade balance has been negative for the third straight month. Eurostat said the trade balance increased slightly in January compared to December when it had reached a level almost as low as in July 2008 when the lowest level since the start of the time series in 1999 had been recorded.
- Month-on-month, exports grew by a seasonally adjusted 3.4% and imports advanced 2.3% in January. The EU trade deficit narrowed to a seasonally adjusted EUR 14.8 billion from EUR 17.4 billion a month ago.
How did Asian markets perform?
- Asian markets finished mixed as of the most recent closing prices. The Shanghai Composite gained 1.12% and the Nikkei 225 rose 0.65%. The Hang Seng lost 0.41%.
- Hong Kong’s Hang Seng Index closed 0.4% lower Friday but still rose 4.2% for the week. The Shanghai Composite rose 1.1% Friday but booked a weekly decline of 1.8%. Japan’s Nikkei 225 advanced 0.7% Friday to gain 6.6% this week.
The yield on the 10-year Treasury note fell 4.6 basis points Friday to 2.146%. For the week, the 10-year yield is up 14.2 basis points, according to Dow Jones Market Data. Yields and debt prices move opposite each other.
- Oil prices settled higher on Friday, but posted a second straight weekly loss, after a volatile trading week with no easy replacement for Russian barrels in a tight market.
- Brent crude futures settled up $1.29, or 1.2%, to $107.93 a barrel, a day after surging nearly 9% in the biggest daily percentage gain since mid-2020.
- U.S. West Texas Intermediate (WTI) crude futures settled up $1.72, or 1.7%, at $104.70 a barrel, adding to the previous session’s 8% jump.
- Gold for April delivery fell 0.7% to settle at $1,929.30 an ounce. For the week, gold dropped 2.8%, marking the biggest weekly percentage decline for a most-active contract since the week ended Nov. 26, 2021, according to Dow Jones Market Data.
- The ICE U.S. Dollar Index, a measure of the currency against a basket of six major rivals, was up almost 0.3% Friday.
- Bitcoin was up 3.1% at $41,975.
Market will digest earnings reports from several companies including Nike, Tencent, Adobe, Nio, Darden Restaurants, FactSet, among others.