Stocks definitely ended Wednesday better than they started, recouping losses triggered by the Russia-Ukraine dispute after the Fed released its final minutes.
The sale began in the morning on signs that Russia is increasing its military presence in Ukraine, without withdrawing its troops as senior officials had claimed. But the Fed came to the rescue in the afternoon, signaling that it was ready to consider faster interest rate hikes to rein in runaway inflation.
Dow Jones Industrial Average
closed down 55 points or 0.2%, after the index gained 422 points on Tuesday. the
advanced by 0.1%, and the
fell 0.1%. The indices gained just after the release of Fed minutes after trading deep in the red earlier in the day.
The Fed minutes, released at 2 p.m. EST, did little to change the perception that the Fed could raise rates by 50 basis points in March. They did, however, report a change in the timeline. They also revealed something else about monetary policy tightening. The minutes state that “a significant reduction in the size of the balance sheet would likely be appropriate.”
The minutes signal that the Fed may sell bonds. This could significantly put pressure on the price of long-term Treasuries, which would drive their yields higher. Higher long-term bond yields make future earnings less valuable, leading to lower stock market valuations. The 10-year Treasury yield remained stable at just over 2%.
But for the most part, “there was no new information in the FOMC meeting minutes from three weeks ago,” wrote Peter Boockvar, chief investment officer at Bleakley Advisory Group. “The bond market has already priced in a series of rate hikes.”
The market liked what the Fed said or didn’t say. With the S&P 500 still down more than 6% from its all-time high in early January, markets were already pricing in the worst from the Fed, that the central bank would raise interest rates by 50 basis points, instead of 25 less. high inflation. Seeing that the Fed didn’t offer worse news than this, the market was pleasantly surprised.
“Markets were apparently expecting a more explicit hawkish signal (e.g. there was no explicit discussion of a more than 25 basis point hike in a meeting),” the economist wrote. of Citigroup Andrew Hollenhorst. “The S&P 500 erased a nearly 1% loss.”
Indeed, the average stock was gaining. Some large-cap stocks performed disappointingly, dragging indices lower. But Invesco’s S&P 500 equal-weight exchange-traded fund (RSP), which equally weights every stock in the index and therefore shows the movement of the average stock, rose 0.3%.
Earlier, word of the buildup came from the Secretary General of the North Atlantic Treaty Organization. On Tuesday, after Russian officials spoke of a pullback, major indexes rallied more than 1%.
For the United States, the main fear at the moment is that a Russian invasion would lead to sanctions on Russian oil and restrict the world’s supply of the raw material. The sanctions would cause oil prices to spike and consumers would pay even higher prices for gas. On Wednesday, the price of WTI crude oil initially rose before falling 1.2% to just under $91 a barrel; the gain over the past month is just over 9%.
“After yesterday’s huge relief rally based on the news that Russia was withdrawing its troops from the Ukrainian border, we are back to uncertainty about Putin’s next move,” wrote Louis Navellier, founder of Navellier. & Associates.
Also on Wednesday, January retail sales rose 3.8% month over month, beating estimates of 2% and outpacing the 2.5% decline seen in the previous result.
fell 0.1%, pressured by geopolitical concerns and UK consumer price index data showing January saw the highest annual inflation rate in 30 years. that of Hong Kong
Hang Seng Index
ended the day up 1.5%.
Here are six stocks in motion on Wednesday:
(ticker: RBLX) fell 26% after the gaming platform reported a record number of daily active users, but showed a bigger-than-expected net loss.
(ERIC) was down 12% after the Swedish telecommunications group said an internal review found compliance issues linked to corruption and money laundering misconduct. An investigation has identified payments to middlemen and the use of non-standard transport routes in Iraq when the Islamic State (now known as the Islamic State) and other terrorist groups controlled swathes of the country.
(VIAC) fell 18% after announcing its results on Tuesday evening. The media group posted a strong quarter of streaming subscriber gains, but that came at the cost of content and marketing spend that depressed fourth-quarter earnings.
After a jump of nearly 32% on Tuesday,
(SPCE) was down 6.4% after the company announced that sales of spaceflight tickets would open to the general public on Wednesday.
(UPST) gained 36% after the company reported earnings of 89 cents per share, beating estimates of 51 cents per share, on sales of $304.8 million, above expectations of 262.9 millions of dollars. The company also announced a $400 million share buyback program.
(MASI) fell 37% after Stifel analysts cut their price target to $250 from $318.