Friday March 4th


Dow futures down 300 points as investors weigh war in Ukraine, stronger-than-expected jobs report

U.S. stock market index futures fell early Friday as worrisome developments in Ukraine weighed on sentiment as investors digested latest reading on the jobs market. Futures tied to the Dow Jones Industrial Average dropped 334 points, or 1%. Those for the S&P 500 also declined nearly 1%, while Nasdaq 100 futures moved down 0.9%. The decline in futures followed reports that smoke was visible from a nuclear power plant in Ukraine — the largest in Europe — after Russian troops attacked. Reports Friday morning indicated that Russian forces had seized the plant in Zaporizhzhia. The situation in Ukraine is rapidly deteriorating, and dispatches from the country are difficult to confirm. Energy prices were higher across the board, with U.S. benchmark West Texas Intermediate crude up 2.4% to $110.26 and global standard Brent crude rising 2.2% to $112.88. Government bond yields plunged as investors cut risk, with the benchmark 10-year Treasury down 6.2 basis points to 1.78%. Futures briefly trimmed their losses after a stronger-than-expected February jobs report. The economy added 678,000 jobs last month, above the 440,000 expected by economists, according to Dow Jones. The unemployment rate ticked down to 3.8%. This is the last jobs report before the Federal Reserve’s next meeting, where the central bank is expected to begin hiking interest rates. Fed Chair Jerome Powell said this week that he is leaning toward support a single 25-basis point hike in March. A basis point is equal to 0.01%. “I think because we saw Powell say, uncharacteristically frankly, specifically say that he planned to support a 25-basis point hike, that speculative thinking may be a little bit more anchored at a 25-basis point hike even if we do see a stronger-than-expected report,” said Lauren Goodwin, economist and portfolio strategist at New York Life Investments. One surprise in the jobs report was wage growth, which was little changed month over month. The slower-than-expected growth could make rising prices more painful for everyday Americans, but could also ease concerns that the recent inflation will prove to be persistent. “The details are bullish for stocks in that job creation remains robust and the participation rate is moving higher while wages came in soft, potentially taking some pressure off the Fed,” said Adam Crisafulli of Vital Knowledge. The war on Ukraine will also be at the front of investors’ minds on Friday. Ukraine still holds its capital city, Kyiv, more than a week into the fighting, though reports of shelling have increased in other major cities. One million Ukrainians have fled the country, according to the United Nations. Meanwhile, economic sanctions from the U.S. and its allies have effectively cut off Russia’s economy from large parts of the global financial system. JPMorgan said in a note on Thursday that Russia’s economy could shrink by 35% at an annualized rate in the second quarter. “Overall our view is that while there will be limited direct impact to U.S. equities from the Russia-Ukraine conflict, as evidenced by the SPX rally since the Russian invasion, the indirect impact via the commodity and sentiment channels is non-trivial,” Maneesh Deshpande, Barclays head of U.S. equity strategy and global equity derivatives, said in a note. Earnings reports drove some big moves in extended trading. Retailer Gap and restaurant chain Sweetgreen both surged after beating expectations. Chipmaker Broadcom rose after outpacing estimates for earnings and revenue. On Thursday, the three major averages closed lower after a choppy session. The Dow was positive for much of the day before closing 96 points lower. The Nasdaq, dragged down by software stocks, fell 1.56%. The Dow is down 0.9% for the week, on track for its fourth negative week in a row. The S&P 500 is down about 0.5% for the week, while the Nasdaq Composite is down more than 1%. Shares in Asia-Pacific slipped on Friday as investors remained on edge over Russia’s invasion of Ukraine. Hong Kong’s Hang Seng index led losses regionally as it fell 2.5% to close at 21,905.29, with shares of HSBC slipping 3.38%. In mainland China, the Shanghai composite shed 0.96% to finish its trading day at 3,447.65 while the Shenzhen component dipped 1.374% to 13,020.46. The Nikkei 225 in Japan fell 2.23% to close at 25,985.47, with shares of conglomerate SoftBank Group dropping 4.78%, while the Topix index shed 1.96% to 1,844.94. South Korea’s Kospi dipped 1.22% on the day to 2,713.43. Oil prices rebounded on Friday as fears of Western sanctions disrupted Russian oil exports, outweighing the possibility of more Iranian supplies, while reports of a nuclear plant fire in Ukraine spooked markets. Global stocks fell and oil prices rose on signs of an escalation in the Russia-Ukraine conflict after reports that a Ukrainian nuclear power plant, Europe’s largest, was on fire after an attack by Russian troops. Brent crude futures for May rose as high as $114.23 a barrel and were at $112.46, up $2.00, or 1.8% by 7:10 a.m. on Wall Street. The contract fell 2.2% on Thursday. U.S. West Texas Intermediate for April rose 2.09% to $109.90 per barrel after touching a high of $112.84 earlier in the session. The contract fell 2.6% in the previous session. Oil prices are set to post their strongest weekly gains since the middle of 2020, with WTI up 18% and Brent up 14% after hitting their highest in a decade this week. Gold rose on Friday, eyeing its best weekly gain since May 2021, as investors scrambled for safe-haven assets after Russia attacked a nuclear power plant in Ukraine — the largest of its kind in Europe. Spot gold rose 0.6% to $1,946.41 per ounce by 0100 GMT and was on track for a weekly gain of about 3%. U.S. gold futures also rose 0.6% to $1,948.60.