Dow records fifth straight week of losses as Biden says allies are trying to avert World War III

US stocks closed lower on Friday, with all three major benchmarks posting another week of losses, after President Joe Biden called for a suspension of normal trade relations with Russia amid sanctions aimed at economically isolating Moscow for his unprovoked attack in Ukraine.

Tentative optimism about the war, linked to Russian President Vladimir Putin’s comments about “positive” changes in talks with Ukraine, faded after Ukrainian Foreign Minister Dmytro Kuleba said that he saw no progress in the Russian-Ukrainian talks.

How have stock indices performed?
  • The S&P 500 SPX index,
    fell 55.21 points, or 1.3%, to close at 4,204.31, with losses led by communications services SP500.50,
    information technology and consumer discretionary sectors.

  • The Dow Jones Industrial Average DJIA,
    slipped 229.88 points, or 0.7%, to end at 32,944.19, giving up modest gains earlier in the session.

  • The Nasdaq COMP composite index,
    fell 286.15 points, or 2.2%, to finish at 12,843.81.

On Thursday, the Dow Jones closed down 112.18 points, or 0.3%, at 33,174.07. The S&P 500 fell 0.4% to 4,259.52 and the Nasdaq Composite fell 0.9% to 13,129.96.

For the week, the S&P 500 lost 2.9%, while the Dow slipped 2% and the Nasdaq fell 3.5%. The Dow had five consecutive weeks of losses, its longest losing streak since the streak ending May 31, 2019, while the S&P 500 and Nasdaq each recorded a second straight week of declines, according to Dow Jones Market Data.

What stimulated the markets?

U.S. stocks fell on Friday as investors remained focused on headlines related to Russia’s ongoing invasion of Ukraine that began more than two weeks ago.

Biden called for an end to normal trade relations for Russia following his invasion of Ukraine and acknowledged the economic hardship the world will endure as he aims to isolate Russia by revoking its most favored nation trading status , which the president says will make it even more difficult. for Moscow to do business. Biden said Western nations were showing restraint to avoid starting World War III.

Stock index futures soared overnight after President Vladimir Putin told his Belarusian counterpart, Alexander Lukashenko, that there were ‘positive’ changes in talks between Russia and the EU. Ukraine, according to a transcript of the meeting provided by the Kremlin and reported by Russian news agency Interfax. However, Ukrainian Foreign Minister Dmytro Kuleba said he saw no progress in the Russian-Ukrainian talks, in an interview with Bloomberg.

Referring to Putin’s comment, “it’s really hard to put much weight on it,” Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said in a phone interview on Friday. “He also said he was not going to invade Ukraine.”

Putin’s upbeat comments came as Russian forces launched new strikes on airports in Western cities on Friday, and Kiev continued to prepare for an assault.

This morning, the market appeared to be “trying to hold on to anything” that might indicate “a resolution to some of the acute fights that are unfolding,” Ma said. But that still seems “a long way off” given events on the ground, he said.

Major U.S. indices suffered another week of losses as investors grappled with the continuing Russian-Ukrainian war. Tech stocks in particular have suffered as bond yields have risen steadily this week, suggesting that concerns about inflation and upcoming central bank interest rate hikes are having a greater influence on markets. as the likely impact of the war in Ukraine.

The Federal Reserve will hold its first policy meeting since the start of the dispute next week, with analysts widely expecting a rate hike of around 25 basis points, amid growing fears the central bank could plunge the economy in a recession as it battles inflationary pressures.

“Before Russia invaded Ukraine, some market prices suggested we could see 7 rate hikes this year, and while some suggest that may not happen now, there is an argument that it could be the lesser of two evils,” Michael Hewson wrote. , chief market analyst at CMC Markets, in a daily note.

“The transitional (inflation) playbook looks like it’s past the year now, with the Fed having to balance the risks of tightening too quickly and tipping the economy into recession or letting inflation do it for it in the end. leaving it to tear,” he wrote.

Goldman Sachs has lowered its forecast for economic growth in the United States, citing the effects of rising oil prices and the conflict on European soil. West Texas Intermediate crude for April delivery rose 3.1% on Friday to settle at $109.33 a barrel.

In U.S. economic reports, data from the University of Michigan consumer sentiment survey showed a drop to an initial March reading of 59.7 from February’s level of 62.8. This “reflects how much inflation is weighing on consumers”, with the rising cost of living beginning to strain budgets, according to BMO’s Ma.

The consumer sentiment survey showed inflation expectations over the next year rose to 5.4% from 4.9% in February, marking the highest level since 1981. Five-year inflation has remained stable at 3%. The results come after consumer price data released on Thursday showed U.S. consumer prices in February rose 7.9%, a 40-year high, and some see the situation worsening. worsen due to the Russian-Ukrainian war.

“There’s been a lot of flux between the two, is it going to be a protracted ground conflict or is it going to be a quick resolution?” said Michelle Cluver, portfolio strategist at Global X, in a phone interview Friday. “It’s like the market is trying to gauge every day which direction it’s going to go.”

Which companies were targeted?
  • Shares of DocuSign Inc.
    fell 20.1% after the online signing company’s annual forecast disappointed on Thursday night.

  • Rivian Automobile Inc. RIVN share,
    fell 7.6% after the electric truck maker said it lost more than $2 billion in the fourth quarter amid continued supply chain disruptions.
How have other assets performed?
  • The yield of the 10-year Treasury note TMUBMUSD10Y,
    was little changed Friday at 2%, but rose 28.2 basis points this week for the biggest weekly gain since September 2019 based on levels at 3 p.m. Eastern Time, according to Dow Jones Market Data. . Yields and debt prices move in opposite directions.

  • The ICE US Dollar Index DXY, a measure of the currency against a basket of six major rivals, rose 0.6% for a weekly gain of around 0.5%.

  • Gold futures for April delivery GC00,

    fell 0.8% to settle at $1,985 an ounce.

  • BitcoinBTC USD,
    was down 1.8% at $38,593.

  • In European equities, the Stoxx Europe 600 SXXP,
    rose 1% and posted a weekly increase of 2.2%; while London’s FTSE 100 UKX gained 0.8% and recorded a weekly rise of 2.4%.

  • In Asia, the Shanghai Composite SHCOMP rose 0.4% but fell 4% on the week; the Hang Seng HSI fell 1.6%, contributing to a 6.2% decline for the week, and the Japanese Nikkei 225 NIK lost 2% and recorded a weekly decline of 3.2%.

—Barbara Kollmeyer contributed to this report.

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