Stocks continued broadly lower on Friday on continued worry about the prospect of war between Russia and Ukraine, states Jon Markman, editor of Strategic Advantage.
The S&P 500 (SPX) fell to 4,348, a decline of 0.7%. It is hard to trade news-driven stock markets, yet it is clear bears are firmly in control of near- and intermediate-term momentum. Every rally to resistance for the benchmark S&P 500 during the past three weeks has been beaten back. The index is now well below its 200-day moving average at 4,460 and downside energy is accelerating.
There is no important support for the benchmark between Friday’s closing level and 4,222, the January 24 low.
Barring some significant resolution in Ukraine encouraged by substantive talks with European and US leaders—or dovish comments about interest rates by the Fed—I suspect that any early rally on Tuesday will be short-lived as bears push for a test of that critical support level. Buckle up, this decline is most likely not over as bears are in the driver’s seat.
Upshot
The Nasdaq (IXIC) dropped 1.2% to 13,548.07 on Friday and the Dow (DIJ) was down 0.7% to 34,079.18. All sectors but consumer staples finished in the red.
Breadth favored decliners three-one, and there were 554 new lows vs 46 new highs. Big caps on the new high list included Coca-Cola (KO), Phillip Morris (PM), General Dynamics (GD), Pioneer Natural Resources (PXD), and Chunghwa Telecom (CHT). Nice to see the consumer staples like KO and PM reassert themselves and not give over all the top spots to energy.
US markets are closed today for the Presidents' Day holiday.
West Texas Intermediate crude oil fell 0.3% to $91.51 a barrel. Oil touched a seven-year high this week as tensions between Russia, the world's third-largest producer, and Ukraine escalated, with US President Joe Biden warning that the risk of an imminent Russian invasion is "very high."
The 10-year US Treasury yield fell five basis points to 1.92%. Treasury yields touched their highest level in about two-and-a-half years Wednesday.
Secretary of State Antony Blinken was scheduled to meet Russian Foreign Minister Sergei Lavrov next week, according to a report from the Guardian. The latest US intelligence assessment indicates Russia is continuing preparations to invade Ukraine, CNN reported, citing a senior US official.
In economic news, US existing home sales rose to 6.5 million seasonally adjusted annual rate in January from a downwardly revised 6.09 million in December, data from the National Association of Realtors showed Friday. That was above the 6.1 million estimate in a Bloomberg survey. The rising value of homes helps to blunt middle-class families’ blow from inflation.
The Conference Board's Leading Economic Index fell 0.3% in January, the first decline since February 2021, due to higher initial jobless claims and lower business confidence and stock prices.
E-commerce sales rose 1.7% in the fourth quarter after a 3.2% third-quarter decline and compared with a 2.5% pace of overall retail sales growth in the fourth quarter. E-commerce sales were up 9.4% from a year earlier.
In corporate news, Roku (ROKU) expects operating earnings in the first quarter to decline more than 50% from a year earlier, as it invests aggressively in its entertainment streaming business and expects supply-chain disruptions to continue pressuring margins. Shares plummeted more than 22%.
DraftKings (DKNG) guidance for 2022 adjusted earnings before interest, tax, depreciation, and amortization, or EBITDA, missed analysts' estimates after losses grew in the fourth quarter despite higher-than-expected revenue. Shares sank nearly 22%.
