Fed and Geopolitical Uncertainty Continue to Weigh on Sentiment…..
U.S. equities finished mostly lower in a choppy session amid heightened geopolitical concerns after the U.S. warned that a Russian invasion of Ukraine could be imminent, even as Russian Foreign Minister Lavrov suggested today that diplomacy may still be an option. Meanwhile, elevated expectations of tighter monetary policies globally continued to weigh on sentiment. Treasuries fell to extend the recent spike in yields, particularly on the short end of the curve, and the U.S. dollar gained ground, while crude oil prices were higher, and gold rallied. The economic calendar was dormant, and the earnings front was relatively quiet, with shares of Splunk rising amid reports that Dow member Cisco Systems made a takeover offer for the data analytics software company, and Dow component 3M Company warned of headwinds to organic growth. Markets in Europe and Asia finished lower.
The Dow Jones Industrial Average lost 172 points (0.5%) to 34,566, the S&P 500 Index decreased 17 points (0.4%) to 4,402, and the Nasdaq Composite was nearly unchanged at 13,791. In heavy volume, 4.5 billion shares of NYSE-listed stocks were traded, and 4.2 billion shares changed hands on the Nasdaq. WTI crude oil jumped $2.36 to $95.46 per barrel. Elsewhere, the gold spot price traded $31.80 higher to $1,873.90 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—was up 0.3% at 96.35.
The markets continue to grapple with expectations that the Fed will tighten monetary policy aggressively to combat persistent inflation pressures while contemplating what the implications could be for the economy. Treasury yields have moved higher, with the short end of the curve decisively outpacing moves on the mid and longer ends.
Treasuries added to last week’s drop, as the yield on the 2-year note rose 7 basis points (bps) to 1.59%, while the yields on the 10-year note and the 30-year bond increased 5 bps to 2.00% and 2.30%, respectively.
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