Stocks Slide as War in Ukraine Intensifies

What you need to know…

The S&P 500 Index ($SPX) (SPY) this morning is down -1.02%, the Dow Jones Industrials Index ($DOWI) (DIA) is down -0.97%, and the Nasdaq 100 Index ($IUXX) (QQQ) is down -0.86%. 

U.S. stock indexes this morning are moderately lower, with the Nasdaq 10 falling to a 1-week low.  A more than -3.7% plunge in the Euro Stoxx 50 today to a 13-month low is undercutting U.S. stock indexes today as the war in Ukraine intensifies.  Russia is accused of nuclear terrorism after its troops shelled the Zaporizhzhia nuclear power plant in Ukraine, Europe’s largest atomic generator. A fire at the plant was eventually contained with no radiation leaking.  U.S. stock indexes recovered some of their losses this morning after Feb nonfarm payrolls rose more than expected, and the U.S. unemployment rate fell to a 2-year low.

U.S. Feb nonfarm payrolls rose +678,000, showing a stronger labor market than expectations of +423,000. Also, the Feb unemployment rate fell -0.2 to a 2-year low of 3.8%, showing a stronger labor market than expectations of 3.9%.

U.S. Feb avg hourly earnings were unch m/m and up +5.1% y/y, weaker than expectations of +0.5% m/m and +5.8% y/y.

Today, Chicago Fed President Evans said that the Fed needs to be moving toward a more neutral policy and a 25 bp rate hike at each of the FOMC's 2022 meetings gets policy close to neutral.

The 7-day average of new U.S. Covid infections fell to a 7-1/4 month low Thursday of 56,717. 

Russia said it will keep its stock market closed until at least March 9, and that will be the longest its stock market will have been closed.   Today, the offshore ruble traded 116.83 rubles/USD, modestly above Wednesday’s record low of 122.49 rubles/USD.

Today’s stock movers…

Weakness in bank stocks today is weighing on the overall market.  Signature Bank of New York (SBNY), Peoples United Financial (PBCT), Citizens Financial Group (CFG), and M&T Bank (MTB) are all down more than -4%, and State Street Corp (STT), Bank of America (BAC), Fifth Third Bancorp (FITB), and Comerica (CMA) are down more than -3%.

Airline stocks are selling off today as the escalation of the Ukraine war threatens to disrupt global flight schedules and keep oil prices elevated.  United Airlines Holdings (UAL) is down more than -7% to lead losers in the S&P 500.  In addition, American Airlines Group (AAL) is down more than -5%, Delta Air Lines (DAL) and Alaska Air Group (ALK) are down more than -4%, and Southwest Airlines (LUV) is down more than -3%.  

Weakness in technology stocks is a bearish factor for the overall market.  ASML Holding NV (ASML) is down more than -5% to lead losers in the Nasdaq 100.  Micron Technology (MU) is down more than -4%, Zscaler (ZS) and Crowdstrike Holdings (CRWD) are down more than -3%, and Alphabet (GOOG), Align Technology (ALGN), and Applied Materials (AMAT) are down more than -2%.

Energy stocks are climbing today, with the price of WTI crude up more than +5%.  Occidental Petroleum (OXY) is up more than +6% to lead gainers in the S&P 500.  ConocoPhillips (COP), Diamondback Energy (FANG), and Marathon Oil (MRO) are up more than +1%

Splunk (SPLK) is up more than +8% today to lead gainers in the Nasdaq 100 after Daiwa Securities raised its recommendation on the stock to outperform from neutral.

Broadcom (AVGO) is up more than +1% today after it reported Q1 revenue of $7.71 billion, stronger than the consensus of $7.61 billion, and forecast Q2 revenue of $7.90 above the consensus of $7.41 billion.

Across the markets…

June 10-year T-notes (ZNM22) this morning are up +26 ticks, and the 10-year T-note yield is down -9.8 bp at 1.743%.  Escalation of the war in Ukraine is hammering global equity markets and fueling safe-haven demand for government debt.  T-notes also garnered support today on an easing of wage pressures after today’s data showed U.S. Feb average hourly earnings rose less than expected.

The dollar index (DXY00) this morning is up +0.98%.  The dollar index jumped to a new 1-3/4 year high today as the escalation of the Ukraine war has led to a sell-off in stocks that boosted the liquidity demand for the dollar.  The dollar also found support after today’s U.S. Feb payroll report showed the pace of U.S. job gains accelerated more than expected. 

EUR/USD (^EURUSD) this morning is down -1.32%.  EUR/USD tumbled today to a fresh 1-3/4 year low on an escalation of the Ukraine war after Russian troops shelled the Zaporizhzhia nuclear power plant in Ukraine, Europe’s largest atomic generator.   Weaker than expected Eurozone economic data today also pressured EUR/USD. 

Today’s Eurozone economic data was bearish for EUR/USD.  Eurozone Jan retail sales rose +0.2% m/m, weaker than expectations of +1.5% m/m.  Also, German Jan exports unexpectedly fell -2.8% m/m, weaker than expectations of +1.0% m/m and the biggest decline in 1-3/4 years.  In addition, German Jan imports unexpectedly fell -4.2% m/m, weaker than expectations of +2.0% m/m and the biggest decline in 1-3/4 years.

USD/JPY (^USDJPY) this morning is down -0.15%.  USD/JPY is moderately lower today as a slump in stocks sparkes safe-haven demand for the yen.  A sharp decline in T-note yields today is also supporting gains in the yen.  Losses in USD/JPY were limited after today’s data showed the Japan Jan jobless rate unexpectedly rose +0.1 to 2.8%, showing a weaker labor market than expectations of no change at 2.7%.

April gold (GCJ22) this morning is up +21.5 (+1.11%), and May silver (SIK22) is up +0.368 (+1.46%).  Precious metals prices this morning are moderately higher, with gold prices climbing to a 1-week high.  A slump in global equity markets today is fueling safe-haven demand for precious metals along with the escalation of the war in Ukraine.  Gold also has support today on a decline in global government bond yields.  A negative for precious metals is today's rally in the dollar index to a 1-3/4 year high.