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US stocks firmly rose on Monday as market participants digested the potential for more sanctions against Russia amid its invasion of Ukraine and ongoing concerns surrounding inflation and a more hawkish Federal Reserve. The price of crude oil resumed its march higher, climbing roughly 4% to hover around $104 per barrel.
- S&P 500 (SPY): +0.86%
- Nasdaq (QQQ): +2.06%
- Dow Jones (DIA): +0.35%
- Russell 2000 (IWM): +0.16%
- Volatility Index (VIX): -5.40%
- Twitter (TWTR): +27.12%
- Digital World Acq (DWAC): -9.98%
- Apple (AAPL): +2.37%
- Meta Platforms (FB): +4.02%
- Tesla (TSLA): +5.61%
- Shopify (SHOP): +4.95%
- Constellation Brands (STZ): +16.40%
- Futu Holdings (FUTU): +19.34%
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In geopolitical news, the US and European Union are considering its next set of punitive sanctions against Russia following their illegal invasion of Ukraine as accusations and evidence that war crimes were committed by Russia grow. The discovery of a mass grave and bodies shot at close range in Bucha, outside Kyiv, a town Ukrainian forces reclaimed from Russian troops, looked set to galvanize the United States and Europe into imposing additional sanctions against Moscow.
In a statement on behalf of the 27-nation bloc, Josep Borrell, the EU’s chief foreign envoy, blamed the occupying Russian forces for the massacre and said the EU will work on further sanctions “as a matter of urgency.”
Some major European officials including Germany’s defense minister said they would support banning Russian natural gas — a move previously excluded from sanctions as Russia supplies about 40% of Europe’s gas energy.
In his widely read annual shareholder letter, JP Morgan (JPM) CEO Jamie Dimon pointed to Russia’s war in Ukraine as one of the three fundamental risks to the economic outlook. The other two were “the dramatic stimulus-fueled recovery from the COVID-19 pandemic” and “the likely need for rapidly raising rates and the required reversal of QE easing [quantitative easing] by the Federal Reserve.”
Dimon said, “We do not know what its outcome ultimately will be, but the hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact. They have roiled global oil, commodity and agricultural markets. Our economists currently think that the euro area, highly dependent on Russia for oil and gas, will see GDP growth of roughly 2% in 2022, instead of the elevated 4.5% pace we had expected just six weeks ago. By contrast, they expect the U.S. economy to advance roughly 2.5% versus a previously estimated 3%.”
Last week, concerns over elevated inflation and geopolitical risks were further exacerbated by the brief inversion of the yield curve. A key part of the US Treasury yield is the spread, or difference, between the 10-year and 2-year yields. This spread briefly inverted, meaning the yield on the 2-year note was higher than that of the benchmark 10-year yield. A yield curve inversion has a history of predicting a recession, with each of the last eight recessions dating back to 1969 preceded by a yield curve inversion. The 2-year, 10-year spread briefly fell as low as minus 0.03 of a basis point, before bouncing back above zero to 5 basis points, according to data by Refinitiv.
In other news, shares of Twitter (TWTR) surged over 25% after Tesla CEO Elon Musk disclosed a 9.2% stake in the company, making him the largest, individual shareholder in the company. Very interesting, given last week he sent a poll asking if Twitter adheres to “the principle of free speech”.
- Shares of Meta Platforms (FB) gained nearly 4% Monday afternoon as technology and growth stocks broadly recovered. The gain put the stock on track to close above its 50-day moving average — a closely watched technical indicator — for the first time since January.
- Prices for U.S. coal topped $100 per ton for the first time since 2008, according to a Bloomberg report citing government data.
- Hertz (HTZ) said Monday it planned to purchase as many as 65,000 electric vehicles from Polestar, an EV startup backed by Volvo.
- Air Lease Corp confirmed its order for 32 Boeing 737 MAX jets on Monday
- Shares of Starbucks (SBUX) in the first day of Howard Schultz third stint as CEO after the company announced it was suspending its $20 billion share buyback program in an effort to conserve cash amid rising material costs and wage pressures.
- Shares of Chinese stocks resumed their march higher following a potential rule change that will let Chinese companies share previously sensitive information with US regulators.
- Employees at Amazon’s (AMZN) warehouse on Staten Island narrowly won a historic union election on Friday to establish the first U.S. union in the company’s nearly 30-year history.
- Ford Motor (F) is recalling 737,000 vehicles in the United States over a part that could develop an oil leak and a software error that could hinder braking, it said on Friday.
- Ford’s U.S. sales of new vehicles declined 17% during the first quarter, including a 26% slide last month, as the automaker continues to battle a global shortage of semiconductor chips.
“The only limit to our realization of tomorrow will be our doubts of today.” –Franklin D. Roosevelt