THE WEEK ON WALL STREET
War in Ukraine weighed on stocks as investors assessed the economic impact of continued hostilities, expanding economic sanctions, and potentially higher inflation due to rising oil prices and new stresses on the global supply chain.
The Dow Jones Industrial Average fell 1.30%, while the Standard & Poor’s 500 lost 1.27%. The Nasdaq Composite index slid 2.78% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, dropped 3.21%.1,2,3
ANOTHER VOLATILE WEEK
The uncertainty introduced from Russia’s invasion continued to whipsaw the financial markets last week. Intensifying hostilities early in the week sent stocks sharply lower as oil prices surged and a flight to safety drove investors to buy bonds.
Stocks rebounded mid-week following the release of positive economic data and Congressional testimony by Fed Chair Jerome Powell, who said the Fed is likely to move forward on rate hikes, but would proceed cautiously. Investor enthusiasm was short-lived, however, as stocks resumed their decline on Thursday into Friday despite a strong employment report.
POWELL TESTIFIES
Fed Chair Powell told Congress on Wednesday that he would propose a 25 basis point increase in the federal funds rate when the Federal Open Market Committee meets in mid-March. He conceded that the invasion of Ukraine and the economic sanctions against Russia introduced a level of uncertainty and that the Fed would proceed carefully with monetary tightening.
Powell also testified that he would not have the Fed’s strategy to shrink its balance sheet finalized before the mid-March meeting. Alluding to the urgency of fighting inflation, Powell left the door open to more aggressive rate hikes later in the year.4
BY THE NUMBER$
INTERNATIONAL TRANSACTIONS - The Society for Worldwide Interbank Financial Telecommunications (SWIFT) was formed 49 years ago in 1973. The non-profit cooperative formed by European bankers operates worldwide in 193 countries and electronically moves transactions between 11,000 financial institutions (source: SWIFT).
BRAND NEW HOMES - The median sales price of a new home sold in the USA in January 2022 was $423,300, an all-time record high both on a nominal basis and on an inflation-adjusted basis (source: Census Bureau).
NOT ALWAYS UP - For 17 consecutive quarters (from 3/31/2007 through 6/30/2011), the average price of American single-family homes fell in value (source: Federal Housing Finance Agency). 5
THE WEEK AHEAD: KEY ECONOMIC DATA
Wednesday: JOLTS (Job Openings and Labor Turnover Survey)
Thursday: Consumer Price Index. Jobless Claims.
Friday: Consumer Sentiment.
Source: Econoday, March 4, 2022
The Econoday economic calendar lists upcoming U.S. economic data releases (including key economic indicators), Federal Reserve policy meetings, and speaking engagements of Federal Reserve officials. The content is developed from sources believed to be providing accurate information. The forecasts or forward-looking statements are based on assumptions and may not materialize. The forecasts also are subject to revision.
THE WEEK AHEAD: COMPANIES REPORTING EARNINGS
Tuesday: Guidewire Software, Inc. (GWRE).
Wednesday: Asana, Inc. (ASAN).
Thursday: JD.com, Inc. (JD), Ulta Beauty, Inc. (ULTA), DocuSign (DOCU),
Rivian Automotive, Inc. (RIVN).
Source: Zacks, March 4, 2022
Companies mentioned are for informational purposes only. It should not be considered a solicitation for the purchase or sale of the securities. Investing involves risks, and investment decisions should be based on your own goals, time horizon, and tolerance for risk. The return and principal value of investments will fluctuate as market conditions change. When sold, investments may be worth more or less than their original cost. Companies may reschedule when they report earnings without notice.
THE WEEKLY RIDDLE
There is a word (four letters long) that begins with the letter I. If you put the letter A at the front of this four-letter word, it becomes a five-letter word which is pronounced exactly the same. Name both words?
LAST WEEK’S RIDDLE: You have a can of soda in your hand and someone tells you to drink the bottom half of it first. How can you do that?
ANSWER: Use a straw.
