Wednesday February 23rd

U.S. stock market index futures were higher in early morning trading Wednesday after the S&P 500 closed in correction territory amid escalating tensions between Russia and Ukraine. Futures contracts tied to the Dow Jones Industrial Average advanced 220 points, or 0.65%. S&P 500 futures gained 0.77% while Nasdaq 100 futures rose 1.11%. In early market news, home retailing giant Lowe’s beat earnings forecasts and said sales rose 5%, sending shares up 3% in premarket trading. During trading Tuesday the Dow fell 483 points, or 1.42%, for its fourth straight negative session. At one point the 30-stock benchmark had been down more than 700 points. The S&P 500 shed 1.01%, and is now 10.25% below its Jan. 3 record close, putting the broad market index in correction territory. The Nasdaq Composite declined 1.23% for its fourth straight negative session. On Tuesday afternoon President Joe Biden announced a first tranche of sanctions against Russia. The measures target Russian banks, the country’s sovereign debt and three individuals. “While uncertainties remain, our work shows that historically military/crisis events tend to inject volatility into markets and often cause a short-term dip, but stocks tend to eventually rebound unless the event pushes the economy into recession,” Eylem Senyuz, senior global macro strategist at Truist, wrote in a note to clients. “Investor sentiment also suggests the bar for positive surprises is low,” Senyuz added. Energy prices moved lower Wednesday while government bond yields edged higher. All 11 S&P 500 sectors declined Tuesday, led to the downside by consumer discretionary stocks, which fell 3%. Energy stocks moved lower despite a jump in oil prices. International benchmark Brent crude traded as high as $99.50 per barrel. West Texas Intermediate crude futures, the U.S. oil benchmark, hit a session high of $96, a price last seen in August 2014. “The contagion risk will completely feed into inflationary pressures as energy costs will skyrocket and that will derail large parts of the economic recovery coming out of Covid,” said Oanda senior market analyst Ed Moya. “Geopolitical risks could lead to a slower growth cycle and that could remove the risk of a half-point Fed rate hike at the March 16th FOMC decision,” he added. Wall Street is betting that there’s a 100% chance of a rate hike at the Federal Reserve’s March meeting, according to the CME Group’s FedWatch tool. With inflation running hot, calls for a 50-basis point hike at the March meeting had been accelerating. As tensions build between Russia and Ukraine, yields have retreated, with the yield on the benchmark U.S. 10-year Treasury falling below 2% as investors seek out safe-haven assets. As of Friday 78% of S&P 500 companies that have reported have topped earnings estimates, while 78% have exceeded revenue expectations, according to data from FactSet. Shares in Asia-Pacific rose on Wednesday as investors continued monitoring the intensifying crisis surrounding Ukraine. Mainland Chinese stocks closed higher with the Shanghai composite gaining 0.93% to 3,489.15 and the Shenzhen component surging 1.902% to about 13,549.99. Hong Kong’s Hang Seng index advanced about 0.6%, as of its final hour of trading. South Korea’s Kospi climbed 0.47%, closing at 2,719.53. Markets in Japan were closed on Wednesday for a holiday. Oil prices took a breather on Wednesday after surging to seven-year highs the previous session as it became clear the first wave of U.S. and European sanctions on Russia for sending troops into eastern Ukraine would not disrupt oil supplies. At the same time, the potential return of more Iranian crude to the market, with Tehran and world powers close to reviving a nuclear agreement, also kept a lid on prices. Brent crude declined 24 cents to $96.60 per barrel, after soaring as high as $99.50 on Tuesday, the highest since Sept. 2014. U.S. West Texas Intermediate (WTI) crude futures slid 30 cents to $91.61 a barrel, after hitting $96 on Tuesday. Gold dipped on Wednesday as riskier assets bounced back, with bullion investors awaiting further developments on the Ukraine crisis, while also preparing for impending policy tightening by major central banks. Spot gold was down 0.2% at $1,894.59 per ounce by 1217 GMT, retreating from a near nine-month high of $1,913.89 hit on Tuesday. U.S. gold futures shed 0.6% to $1,896.