Week 12 in Brief
- U.S. stocks rebounded Friday to close the week higher as oil prices rose on reports of a missile strike on a Saudi Aramco facility and as investors continued to weigh rising interest rates.
- The Dow Jones Industrial Average, S&P 500 and Nasdaq Composite each booked a second straight week of gains. Investors largely looked past the Russia-Ukraine war to increasingly hawkish commentary from Federal Reserve officials.
How did the major indices perform?
- The Dow Jones Industrial Average rose 153.30 points, or 0.4%, to close at 34,861.24.
- The S&P 500 Index advanced 22.90 points, or 0.5%, to finish at 4,543.06.
- The Nasdaq Composite fell 22.54 points, or 0.2%, to end at 14,169.30.
- For the week, the Dow booked a gain of 0.3%, the S&P 500 rose 1.8%, and the Nasdaq advanced 2%.
What drove the US market?
- Volatility: U.S. stocks indexes ended a choppy trading session Friday with mixed results after oil futures turned higher following news reports that a missile strike had caused an explosion and fire at a Saudi Aramco facility in Jeddah. Yemen’s Iran-backed Houthi rebels have claimed credit for past strikes on Saudi facilities.
- Monetary Policy: The Federal Reserve’s monetary policy and the Russia-Ukraine war remained in focus for investors. Investors are readjusting their sights for how high-interest rates must go and how fast those rates must rise in order to reduce the inflation pressure. The Russia-Ukraine war remains “a major shock” that risks making the problem of inflation “even more intense” before the surge in cost of living starts to come back down. Investors should expect more volatility and very mixed equity performance. While the Federal Reserve’s more hawkish approach has helped lift the stock market, the recent rally is probably limited as financial conditions “ultimately” will tighten again should the Fed continue its hawkish messaging. Investors’ bias remains toward larger, safer stocks demonstrating pricing power in the next round of earnings as inflation and higher interest rates will remain the biggest concern.
- Economic Data: The final reading of the University of Michigan’s consumer sentiment in March fell slightly to 59.4 and stayed at a nearly 11-year low because of high inflation and worry about the Russian invasion of Ukraine. Meanwhile, pending home sales slid 4.1% in February, according to the National Association of Realtors. That’s the lowest level in nearly two years.
Which US stocks were in focus Friday?
- Information technology and consumer discretionary were the worst-performing sectors in the S&P 500 index Friday, each seeing losses of around 0.1%, according to FactSet data, at last check. The energy sector had the biggest gains, up about 2.3%.
- Rising yields are bringing back concern about valuations among those more expensive stocks in the market. Financials, energy and more cyclical parts of the market are doing well as the S&P 500’s financial sector closed about 1.3% higher Friday.
- JD.com Inc. shares fell 2.6% after the U.S. Public Company Accounting Oversight Board said it was premature to say it was close to an agreement with China on allowing audit inspections of U.S.-listed Chinese companies. Alibaba Group Holding shares slid 1.9%, following a fall of around 6% in Hong Kong.
- NIO Inc. shares dropped 9.4% after the Chinese electric-vehicle maker posted better-than-forecast revenue in the fourth quarter, but disappointed with its deliveries forecast.
- Bed Bath & Beyond Inc. shares rose 2.2%, after the home goods retailer announced a “cooperation agreement” with activist investor Ryan Cohen and RC Ventures LLC.
How did the European markets perform?
- European markets closed slightly higher on Friday as investors continued to monitor the war in Ukraine and assess the outlook for global monetary policy.
- The pan-European Stoxx 600 closed higher by just 0.12%, having reversed earlier losses. Oil and gas stocks climbed 1.2%, while banks shed 0.4%.
- In Monetary policy, the European Council and European Parliament reached a provisional agreement on a Digital Markets Act aimed at tech giants such as Google parent Alphabet Inc., Apple, and Facebook parent Meta Platforms.
- Regarding individual share price movement, Sweden’s Trelleborg surged more than 23% to lead the European blue-chip index after Yokohama Rubber announced that it would buy its tire business for $2.18 billion. At the bottom of the index, German cooking appliance manufacturer Rational fell 11%.
- Global markets have been tracking negotiations over Russia’s invasion of Ukraine closely, and Thursday saw a host of high-level meetings between world leaders and international bodies. NATO committed extra troops along its eastern flank, the U.K. and the U.S. rolled out more sanctions against Russian elites and officials, and the U.S. announced billions more in aid to Ukraine.
- In economic data, Germany’s Ifo Business Climate Index fell sharply in March as the war in Ukraine darkened sentiment in Europe’s largest economy.
How did Asian markets perform?
- Asian stocks fell Friday after Western governments promised new sanctions on Russia and President Vladimir Putin tried to prop up Moscow’s sinking ruble by threatening to require Europe to use it to pay for gas exports. MSCI’s broadest index of Asia-Pacific shares outside Japan traded around 1% lower.
- The Shanghai Composite closed 1.2% lower Friday for a weekly decline of 1.2%. The Hang Seng Index dropped 2.5% Friday, booking a weekly decline of less than 0.1%. Japan’s Nikkei 225 rose 0.1% Friday, bringing its weekly gain to 4.9%.
- Investors watched shares of Apple suppliers in Asia. The tech giant is reportedly planning a hardware subscription service for iPhones that could launch as soon as the end of this year. Apple rose over 2% on Thursday.
- In Japan, shares of Apple suppliers rose. Murata Manufacturing shares jumped 1.22%, while Alps Alpine climbed 1.15%. Taiyo Yuden was up 1.06%. In Taiwan, Taiwan Semiconductor Manufacturing Company jumped 1.18%, while shares of Hon Hai Precision Industry slipped 0.47%.
The yield on the 10-year Treasury note jumped about 15.1 basis points to 2.491%, the highest since May 6, 2019, based on 3 pm Eastern Trading levels, according to Dow Jones Market Data. Treasury yields and prices move in opposite directions.
- Oil prices fell almost 2% overnight after a volatile session. During Asia trade on Friday, U.S. crude was down 0.14% to $112.21 per barrel, and Brent was little changed at $118.99.
- International Energy Agency members are seeking to reduce their use of its crude and are ready to release more oil from emergency stockpiles if needed.
- Contributing to oil’s decline, Organization of the Petroleum Exporting Countries officials have also expressed to the EU their discomfort on a proposed ban on Russian oil.
- Meanwhile, Gold for April delivery fell 0.4% to settle at $1,954.20 an ounce. But the precious metal still saw a weekly rise of 1.3% based on prices of the most-active contract, according to Dow Jones Market Data.
- The ICE U.S. Dollar Index, which tracks the dollar against a basket of six major rivals, was fractionally higher Friday and showed a weekly gain of 0.6%. The index closed at 98.613, dropping from levels around 98.7 earlier.
- The Japanese yen traded at 121.67 per dollar, softer compared to earlier. The Australian dollar was at $0.7504, as it continued to jump from levels around $0.74 earlier in the week.
- Bitcoin was trading 1.3% higher at around $44,485.
- Investors will parse economic data, including key inflation, housing, labor market data and February and March job reports.
- Companies including Micron, Lululemon, Chewy, BioNTech, Walgreens, BlackBerry & more will be reporting earnings