At the close of yesterday’s session, the DOW JONES Ind Average fell 483 points, or 1.42%, for its fourth consecutive negative session. At one point, the 30-stock index had lost more than 700 points. The S&P 500 it lost 1.01%, and is now 10.25% below its record close on January 3, putting the broad market index in correction territory. The Nasdaq Composite It fell 1.23% in its fourth consecutive negative session.
On Tuesday afternoon, President Joe Biden announced a first tranche of sanctions against Russia. The measures are aimed at Russian banks, the country’s sovereign debt and the large capitals of the region. “Although uncertainties remain, historically military events/crises tend to inject volatility into markets and often cause a short-term decline, but equities tend to recover eventually unless the event pushes the economy into recession,” Eylem wrote. Senyuz, Senior Global Macro Strategist at Truist, in a note to clients. “Investor sentiment also suggests the bar for positive surprises is low,” Senyuz added.
All 11 sectors that make up the S&P 500 were down on Tuesday, led by consumer discretionary stocks, which fell 3%.
Energy stocks fell despite rising oil prices. Brent crude, an international reference, reached a price of 99.50 dollars per barrel. West Texas Intermediate crude futures, the US oil benchmark, reached a session high of $96, a price last seen in August 2014. At this time, a barrel of Brent is down 0.45%, to the 93.53 dollars while West Texas falls a little more than half a percentage point, to 91.41 dollars.
“The risk of contagion will fully fuel inflationary pressures, as energy costs will skyrocket and that will derail much of the economic recovery that comes from Covid”said Oanda Principal Markets Analyst Ed Moya. “Geopolitical risks could lead to a slower growth cycle and that could eliminate the risk of a half-point Fed rate hike in the March 16 FOMC decision,” he added.
Wall Street is betting there is a 100% chance of a rate hike at the Federal Reserve’s March meeting, according to CME Group’s FedWatch tool. With inflation running red hot, calls for a 50 basis point hike at the March meeting have gathered pace.
As tensions rise between Russia and Ukraine, yields have retreatedand the benchmark 10-year US Treasury yield has fallen below 2% as investors seek haven assets.
At the corporate level today it became known that the giant of the retail sale of products for the home Lowe’s Com surpassed profit forecasts and said that sales increased 5%, which is making its shares write down 3% in opening operations. The company reported earnings per share of $1.78 versus $1.71 expected, on revenue of $21.34 billion, above the $20,900 estimate.
Automotive component maker Tenneco Rg-A has agreed to be acquired by affiliates of Apollo Global Management (APO) for $20 a share in cash, versus Tenneco’s Tuesday close of $9.98 a share. The transaction is expected to close during the second half of this year.
Palo Alto Networks beat estimates by 9 cents with adjusted quarterly earnings of $1.74 per share and revenue that also beat Street’s forecast. Palo Alto also gave a better-than-expected forecast, with its shares up more than 7% at the open.
Automaker Stellantis Br beat its profit targets in the first year after the merger of Fiat Chrysler and Peugeot’s parent group PSA. He also said that he was getting the intended benefits of that combination sooner than originally expected.
Kodiak Sciences said a mid-to-late trial of its experimental eye drug did not show it to be inferior to Regeneron’s Eylea macular degeneration (REGN) treatment.
As of Friday, 78% of reporting S&P 500 companies have beaten earnings estimates, while 78% have beaten earnings expectations, according to data from FactSet.
At the macro level, mortgage applications have been known. The escalation in mortgage rates is affecting both potential home buyers and candidates to refinance. Total mortgage applications fell 13.1% last week, to the lowest level since December 2019, according to the Mortgage Bankers Association. Applications to refinance fell 15% weekly and were 56% lower than a year ago.
“Higher mortgage rates have quickly shut down refinances, with activity down in six of the first seven weeks of 2022,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. The median interest rate contracted for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 4.06% from 4.05%, with points rising to 0.48 from 0. 45 (including the origination commission) for loans with a down payment of 20%.
