Stocks Finish Mixed, Clawing Back from Earlier Declines…..
U.S. stocks finished mixed in choppy trading, battling back towards the close, as investors continued to assess news surrounding Russia and Ukraine. Volatility surged and the markets continued to react to the invasion of Ukraine by Russia, which prompted the U.S., West and other global allies to ramp-up sanctions, including prohibitions of some Russian banks from using the key SWIFT global payments system, as well as penalties for Russia’s central bank. While geopolitics has been a major driver recently, a heavy dose of economic data and events loom on the week’s horizon, with Fed Chairman Jerome Powell set to conduct two days of Congressional testimony, President Biden expected to deliver his State of the Union address, and reports on manufacturing and services slated to precede Friday’s key nonfarm payroll report. In economic news today, Chicago manufacturing growth slowed more than expected but Dallas output accelerated more than anticipated. Treasuries moved higher to weigh on yields, and the U.S. dollar gained ground. Gold increased and crude oil prices jumped. The equity front was relatively quiet ahead of some earnings reports from the retail sector later this week, though First Horizon shares surged as it entered into an agreement to be acquired by Toronto-Dominion Bank in a transaction valued at about $13.4 billion, and Dow member Chevron reported an agreement to acquire Renewable Energy Group for about $3.2 billion. Europe finished broadly lower as sanctions against Russia intensified, and Asia was mostly higher.
The Dow Jones Industrial Average fell 166 points (0.5%) to 33,893, the S&P 500 Index lost 11 points (0.2%) to 4,374, and the Nasdaq Composite gained 57 points (0.4%) to 13,751. In heavy volume, 5.9 billion shares of NYSE-listed stocks were traded, and 5.7 billion shares changed hands on the Nasdaq. WTI crude oil moved $4.13 higher to $95.72 per barrel. Elsewhere, the gold spot price increased $23.70 to $1,911.30 per ounce, and the Dollar Index—a comparison of the U.S. dollar to six major world currencies—gained 0.1% at 96.75.
The markets continued to grapple with Russia’s invasion of Ukraine, and the response from the U.S. and the West, along with other allies. The latest wave of sanctions delivered further pressure on restrictions of some Russian banks, including the blockage of financial institutions from using the SWIFT global payment system, which has been seen as one of the more powerful tools that could be deployed. Additionally, the U.S. Treasury announced restrictions on transactions with Russia’s central bank, which responded with a hike of its benchmark interest rate from 9.5% to 20.0% and announced controls on the flow of capital. Russia’s ruble continued to fall to a record low. The markets were paying attention to talks between Russian and Ukrainian officials that took place today. The meeting concluded and the sides are expected to hold another round of talks in the coming days. Defense-related stocks moved higher today, along with Energy issues, while financials and healthcare sectors saw pressure.
The Chicago PMI fell more than expected but remained in expansion territory (a reading above 50). The index fell to 56.3 in February from January’s 65.2 reading, versus the Bloomberg estimate calling for a decrease to 62.3. The weaker-than-expected report came as growth in new orders and production continued, but at slower rates, supplier delivery times expanded at a slower rate, and the contraction in employment accelerated. Prices paid did decelerate but remained in expansion territory.
The Dallas Fed Manufacturing Index moved further into expansion territory (a reading above zero) than expected for February. The index increased to 14.0 from 2.0 in January and compared to forecasts calling for a 4.3 reading. New orders and shipments grew at faster paces, while production slowed but remained above zero and employment growth decelerated.
The advance goods trade balance showed that the January deficit unexpectedly widened, coming in at $107.6 billion, versus the Bloomberg consensus estimate calling for it to contract to $99.5 billion from December’s downwardly-revised shortfall of $100.5 billion.
Preliminary wholesale inventories rose 0.8% month-over-month (m/m) for January, compared to expectations of a 1.3% gain, and versus December’s upwardly-revised 2.3% increase.
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