Psycho’s Market Recap – Feb 24, 2022

First off, thoughts and prayers to everyone in Ukraine, especially to all mothers and children that have to live through this. 

In an extraordinary session, US stocks staged a massive reversal to finish the day green following a more than -2% decline in the major indexes. In particular, the tech-heavy Nasdaq (QQQ) swung a staggering 6% today, from -3.21% to +3.36%.

Markets Today (from lows to close)

  • S&P 500 (SPY): -2.59% to +1.50%
  • Nasdaq (QQQ): -3.21% to +3.36%
  • Dow Jones (DIA): -2.62% to +0.25%
  • Russell 2000 (IWM): -2.45% to +2.62%
  • Volatility Index (VIX): +10.89% to -3.14%
  • Tesla (TSLA): -8.30% to +4.81%
  • Amazon (AMZN): -3.60% to +4.51%
  • Microsoft (MSFT): -3.31% to +5.11%
  • Occidental Petroleum (OXY): +3.62% to +0.59%
  • NVIDIA (NVDA): -6.19% to +6.08%
  • Roblox (RBLX): -7.03% to +9.68%

In a speech, President Biden unveiled a new tranche of sanctions against Russia in response to its attack and invasion of Ukraine. Biden said the U.S. will block four additional Russian banks, including the two largest — Sberbank and VTB — from having access to the U.S. financial system, limit Russia’s ability to import Western technology, and, along with NATO allies, limit Russia’s ability to do business in euros, dollars, pounds, and yen.  Biden said the sanctions were meant to, “impose a severe cost on the Russia economy, both immediately and over time.”

Biden said that the U.S. and its allies would not take the step of keeping Russia from using the SWIFT system for global banking transactions because Europe did not want to, but he said it would be held in “reserve.”

European allies acted in lockstep to punish Moscow for its provocation. U.K. Prime Minister Boris Johnson unveiled Britain’s largest-ever package of sanctions against Russian banks, members of President Vladimir Putin’s closest circle and wealthy Russians who frequent London.

In the US, the conflict creates added uncertainty for market participants who are already grappling with a hawkish shift in the Federal Reserve to fight rising inflation. The war between Russia and Ukraine threatens to exacerbate already surging prices and spur other economic disruptions, especially when it comes to oil prices, that could complicate the Fed’s policy-making choices. Today, crude oil jumped over $100 a barrel for the first time in 8 years. 

John Lynch, Chief Investment Officer at Comerica Wealth Management, said “Energy prices have surged and the threat of a supply shock in oil places further burdens on discretionary consumption, possibly weighing on growth and complicating the Federal Reserve’s plans to combat inflation by raising interest rates.”

In stock news, The Securities and Exchange Commission has initiated a probe into whether stock sales by Tesla Inc. (TSLA) Chief Executive Elon Musk and his brother violated insider trading rules, according to a report by the Wall Street Journal that cited people familiar with the matter. The SEC is investing Elon’s brother Kimbal Musk’s sale of $108 million worth of stock the day before Elon Musk tweeted a poll asking whether he should sell 10% of his stake in Tesla.

“Keep smiling, because life is a beautiful thing and there’s so much to smile about.” -Marilyn Monroe