Stocks Slump on Concern a Russian Invasion of Ukraine is Imminent

What you need to know…

The S&P 500 Index ($SPX) (SPY) on Friday closed down -1.90%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.43%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -3.73%. 

U.S. stock indexes on Friday closed sharply lower.  The S&P 500 and Nasdaq 100 fell to 2-week lows, and the Dow Jones Industrials dropped to a 1-1/2 week low.  Stocks on Friday erased an early advance mid-morning after the University of Michigan’s Feb U.S. consumer sentiment index fell more than expected to a 10-1/4 year low. Stock losses accelerated Friday afternoon on heightened geopolitical tensions after U.S. National Security Advisor Sullivan said Russia could take offensive military action or attempt to spark a conflict inside Ukraine as early as next week.

Friday’s U.S. economic data was bearish for stocks after the University of Michigan’s Feb U.S. consumer sentiment index fell -5.5 to a 10-1/4 year low 61.7, weaker than expectations of 67.0. 

The 7-day average of new U.S. Covid infections fell to a 1-1/2 month low Thursday of 206,569, down from the mid-January record high of 802,223.

Today’s stock movers…

A sell-off in technology stocks Friday weighed on the overall market. Advanced Micro Devices (AMD) closed down more than -10% to lead losers in the Nasdaq 100.  Xilinx (XLNX) closed down more than -9%, and Marvell Technology (MRVL), Nvidia (NVDA), Illumina (ILMN), and Atlassian Corp PLC (TEAM) closed down more than -7%.  NXP Semiconductors NV (NXPI) and Lumen Technologies (LUMN) closed down more than -6%.

Under Armour (UAA) plunged -12% Friday and was the largest loser in the S&P 500 after it said it sees “material impacts” from supply chain constraints for the spring-summer 2022 season.

Energy stocks and energy service providers rallied Friday after crude prices surged more than +3% to a 7-1/2 year high.  Baker Hughes (BKR) closed up more than +6%, and Occidental Petroleum (OXY) closed up more than +5%.  Phillips 66 (PSX) closed up more than +4%, and Diamondback Energy (FANG), Devon Energy (DVN), Marathon Oil (MRO), and Schlumberger (SLB) closed up more than +3%.  Chevron (CVX) closed up +2% Friday to lead gainers in the Dow Jones Industrials.

Newell Brands (NWL) closed up more than +11% Friday to lead gainers in the S&P 500 after it reported Q4 normalized EPS of 42 cents, stronger than the consensus of 32 cents 

Across the markets…

March 10-year T-notes (ZNH22) on Friday closed up +19 ticks, and the 10-year T-note yield fell by -9.7 bp to 1.932%.  Mar T-notes opened higher Friday on positive carry-over from a rally in German bunds after ECB President Lagarde pushed back on the prospects of raising interest rates.  Gains in T-notes accelerated Friday afternoon on increased safe-haven demand for government debt when stocks plunged after the U.S. warned that Russia might take offensive military action against Ukraine as soon as next week.  T-notes fell back from their best levels Friday after the 10-year breakeven inflation expectations rate rose to a 1-month high of 2.506%.