Stocks closed lower for the week as escalating tensions on the Russian-Ukrainian border added to existing jitters over higher inflation and a pending tightening of monetary policy.
The Dow Jones Industrial Average slid 1.90%, while the Standard & Poor’s 500 declined 1.58%. The Nasdaq Composite index lost 1.76% for the week. The MSCI EAFE index, which tracks developed overseas stock markets, fell 1.00%.1,2,3
Markets have been skittish in recent weeks due to persistent, elevated inflation and the uncertainty over how aggressive the Federal Reserve may be with its monetary tightening. As tensions escalated between Russia and the West over a possible Russian invasion of Ukraine, investors moved away from risk assets, such as stocks, and sought the safety of U.S. Treasury bonds.
Stocks were hard hit on Thursday as reports surfaced that both sides were exchanging artillery fire. The slide continued on Friday as prospects of a diplomatic offramp appeared to dim. While geopolitical news dominated trading last week, investors were relieved by the Federal Open Market Committee meeting minutes (released on Wednesday) that suggested the Fed may not act any more aggressively than current market expectations.4
An Early Economic Snapshot
Last week three economic reports provided an update on the state of the economy. The first was the Producer Price Index, which suggested that inflationary pressures remain acute. Wholesale prices rose 1.0% last month and posted a 12-month rise of 9.7%, the latter of which was near a record high.4
The consumer showed continued strength as retail sales rose a better-than-expected 3.8%, though some of that gain may be due to higher costs. Meanwhile, industrial production gained 1.4%, nearly triple the consensus expectation. Capacity utilization increased 1.0 percent, reaching its highest level since March 2019.5
This Week: Key Economic Data
Tuesday: Purchasing Managers’ Index (PMI) Flash. Consumer Confidence.
Thursday: Gross Domestic Product (GDP). Jobless Claims. New Home Sales.
Friday: Consumer Sentiment. Durable Goods Orders.
Source: Econoday, February 18, 2022
This Week: Companies Reporting Earnings
Tuesday: The Home Depot, Inc. (HD), Palo Alto Networks, Inc. (PANW), Agilent Technologies, Inc. (A).
Wednesday: Lowe’s Companies, Inc. (LOW), The TJX Companies, Inc. (TJX), eBay, Inc. (EBAY), Booking Holdings, Inc. (BKNG).
Thursday: Block, Inc. (SQ), Dell Technologies, Inc. (DELL), VMware, Inc. (VMW), Ingersoll Rand, Inc. (IR), AnheuserBusch InBev (BUD).
Friday: Berkshire Hathaway, Inc. (BRK.B), EOG Resources, Inc. (EOG).
Source: Zacks, February 18, 2022
Weekly Market Insights: Inflation and Ukraine Rattle Investors Another Week
February 23, 2022|