Weekly Market Trends — Issue #24
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THE MARKETS LAST WEEK
Last week the S&P 500 fell 1.58%, the DOW lost 1.9%, the NASDAQ dropped 1.76%. There has been a whipsaw of volatility from fears of Ukrainian invasion that just today broke out as Russia entered Ukraine. Futures subsequently falling further, opening Sunday deeply negative, another 2.7%.
On Wednesday, the Federal Reserve’s January meeting minutes lead to a mixed day for all the major indexes. By Thursday, fears of Russia invading Ukraine returned, and the Dow shed 622 points to secure its worst day of 2022. U.S. stocks fell again on Friday with investors not willing to hold risk exposure over the long holiday weekend. Investors were dumping risky assets and rotating into the perceived safety of bonds Thursday and Friday.
COVID 19 LINGERS
A subvariant of Omicron known as BA.2 is spreading fast and may cause severe disease, research from Japan suggests. New lab experiments show BA.2 is capable of thwarting some of the key weapons we have against Covid-19, including being able to escape the immunity created by vaccines.
ENERGY & OIL
The situation in Russia could cause large swings in oil prices, Barron’s Avi Salzman writes that oil’s eight-week winning streak ended on Friday.
In Iran, U.S. and European diplomats appear to have made progress in coming to a new nuclear deal, which would allow Iran to resume oil exports to much of the world in return for assurances that the country would not build nuclear weapons. Iran could add about one million barrels of oil to daily global supplies, a boost of about 1%. That may not seem like much, but relatively small changes at the margins can have large impacts on prices. Without an Iran deal, oil is likely to resume its rise. The only sector up over the past month is energy, which could also benefit further if a Russia invasion pushes up oil prices.
EARNINGS THIS WEEK
U.S. stock and bond markets will be closed for Presidents Day on Monday. Fourth-quarter earning season resumes Tuesday, with results from Agilent Technologies, Home Depot, and Medtronic. On Wednesday, Booking Holdings, eBay, Lowe’s, Stellantis, and TJX report.
Thursday will be particularly busy: Alibaba, Anheuser-Busch InBev, Coinbase, Dell Technologies, Etsy, Moderna, Newmont, Norwegian Cruise Line, and Occidental Petroleum will be among the highlights. Finally, EOG Resources and Liberty Media close the week on Friday.
NEXT WEEK IN THE ECONOMY
The economic data highlights next week will include IHS Markit’s manufacturing and services purchasing managers’ indexes for February and the Conference Board’s consumer confidence index for February — all on Tuesday. The surveys are each expected to come in flat to down versus January.
The Census Bureau will also report January durable-goods orders on Friday, which are often seen as a proxy for business investment. Finally, the Bureau of Economic Analysis will report personal income and spending for January on Friday. American consumers are expected to have spent more and earned slightly less compared with the prior month.
