All major stock indexes on Wall Street recorded heavy losses on Thursday, as investors looked at the emerging new escalation of the Russian-Ukrainian crisis, which led them to a massive “exit” from high-risk investment products.
The industrial Dow Jones recorded losses of 622.24 points or 1.78%, to 34,312.03 points, with the widest S&P 500 to move down 95.71 points or 2.14%, to 4,379.30, while the technological Nasdaq “lost” 407.38 points or 2.88%, to 13,716.72 points.
“In the short term, the market is moving according to the signs coming from Russia,” said Yung-Yu Ma, head of investment strategy at BMO Wealth Management. “This negativity, the extra bad cloud over the market is weighing heavily at the moment,” he added.
The “war drums” in Europe and more specifically on the Russian-Ukrainian border intensified the sell-off towards the end of the meeting.
US Secretary of State Anthony Blinken described from the UN Security Council a whole possible plan by Russia on how to justify and carry out an invasion of Ukraine, but at the same time suggested a meeting with him next week. His Russian counterpart, Sergei Lavrov, on European soil, creating a modest optimism that there could be a diplomatic outlet.
Blinken’s reports followed a new warning from US President Joe Biden about a “very large” threat of Russian invasion in the immediate future.
Russia insists it will not invade, but said it was not satisfied with the US response to its demands for new security agreements and threatened to use “military-technical” means.
The VanEck Russia ETF, which reflects the course of shares related to Russia, fell more than 4%.
The decline was in a number of industries, with technology leading the way in the S&P 500.
In contrast, the commodity sector, which is considered to be the least affected by market turmoil, recorded the best performance of the day.
Walmart’s share led the industry as it exceeded analysts’ expectations and confirmed its guidance, with its share up 4%
Investors sought safe havens, with gold rising more than 1% and the yield on the 10-year US government bond, which is moving against its price, falling below 2%.
Investors also incorporated the latest “wave” of corporate results in their assessments.
“The market is not only trying to keep pace with the tension in the Russian-Ukrainian, but also in a minefield of corporate results,” said Adam Sarhan, CEO of 50 Park Investments.
Palantir’s share sank 15.8% as the company “lost” analysts’ expectations regarding its profits, while Nvidia’s share fell 7.5 %%, despite the better-than-expected results, as guidance for its gross margins are slightly lower than forecast.
Cisco shares rose 2.7% after the positive results and the review of guidance for improvement. DoorDash saw its title jump by 12%, after the announcement of results and orders that exceeded all expectations.
The increase in applications for new unemployment benefits in the US last week, which was announced today, also worsens the market climate, while the start of new housing moved lower than expected by analysts in January.
During the week, all three key indicators went into negative territory.
Among the 30 Dow shares, 5 moved with a positive sign and 25 with a negative. The profits were led by those of Walmart, Cisco, Coca Colawhile those losses of Salesforce, Caterpillar, 3M.
Macro
The number of Americans who submitted for the first time application for unemployment benefit rose unexpectedly last week, although it remained at levels indicating a healthy labor market.
In particular, the initial applications for state unemployment benefits increased by 23,000 to 248,000 on a seasonally adjusted basis for the week ended February 12, as announced today by the US Department of Labor.
Analysts’ average estimates in a Reuters poll put the applications at 219,000 for the last week.
Applications have returned to a downward trajectory after a three-month high in mid-January, close to 290,000, amid a rapid rise in coronavirus cases due to the micron mutation.
The United States is now announcing an average of 145,769 new infections a day, up from more than 700,000 in mid-January.
Slowing down showed the manufacturing in Philadelphiaaccording to data released today by the Federal Reserve of Philadelphia.
In particular, the Fed Philadelphia manufacturing index fell to 16 points this month from 23.2 points in January.
Economists in a Wall Street Journal poll expected the index to fall, but lower, setting the bar at 19 points.
The index for new orders also declined in February, falling to 14.2 points this month from 17.9 points in January. The index of remittances also moved downwards, sliding to 13.4 points from 20.8 points last month, which is in fact the lowest level since August 2020.
The index for the prospects of the next half also recorded a slight decline, which stood at 28.1 points from 28.7 points in January.
“Processing… seems to have slowed down in the last two months, but at this stage it is impossible to know whether this is just a blow due to a lack of manpower during the Omicron wave, or the onset of a milder trend.” notes Ian Shepherdson, chief economist at Pantheon Macroeconomics.
A similar survey by the Fed of New York on Tuesday showed that the manufacturing activity index stood at just 3.1 points in February after the unexpected negative measurement recorded in January.
Both the Philly Fed and the Empire State Index are considered good precursors for manufacturing health. In January, the national manufacturing index ISM fell for the third consecutive month to a 14-month low of 57.6 points, but still well above the 50 points separating expansion from contraction.
It also receded in January construction of new homes in the USAfor the first time in three months, although building permits, an indication of the market trend in a few months, increased.
In particular, home declines fell 4.1% in January to 1.64 million year-on-year, according to government data released today.
At the same time, permits for newly built homes increased by 1% from December to 1.9 million units.
Analysts’ average estimates in a MarketWatch poll put the startups at 1.69 million with building permits at 1.75 million.
Source: Capital
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