Psycho’s Market Recap – March 2, 2022

Stocks rose on Wednesday as market participants continued to weigh developments in the Russia/Ukraine conflict and digested new remarks by Fed Chair Jerome Powell, who said the central bank remains on track to raise interest rates later this month (March 16). 

Markets Today

  • S&P 500 (SPY): +1.84%
  • Nasdaq (QQQ): +1.68%
  • Dow Jones (DIA): +1.75%
  • Russell 2000 (IWM): +2.38%
  • Volatility Index (VIX): -7.71%
  • Snowflake (SNOW): -30% after-hours
  • NVIDIA (NVDA): +3.18%
  • Apple (AAPL): +2.06%
  • Nordstrom (JWN): +38.38%
  • AMD: +3.91%

As a major producer of oil and natural gas, Russia’s invasion of Ukraine has caused energy prices to skyrocket, with crude oil prices hitting as high as $112 per barrel, the highest level since 2011. OPEC+ said Wednesday that it would continue to increase output in April by 400,000 barrels per day compared to March, keeping this rate of production increases in line with recent months’ rises despite strained oil supplies.

The latest move higher in energy markets also came even after the International Energy Agency agreed to release 60 million barrels from global stockpiles to help ease the pressure on the energy market.

The West responded to Russia invasion of Ukraine by imposing sweeping sanction, including restrictions on Russia’s central bank, access to the SWIFT global payments system, and freezes on a variety of key Russian institutions’ and officials’ assets, among some other measures. The sanctions have so far cratered the Russian economy, collapsing their stock market and the value of their currency and triggering bank runs.

Many major companies have also added further pressure to Russia, including Apple (AAPL), which said Tuesday it would pause all product sales to the country, and Disney (DIS), which said it will stop releasing films in Russia. 

In the US, market participants digest new remarks from Jerome Powell as he gave his semi-annual monetary policy testimony before Congress. Most notable, Powell said he was “inclined” to support a 0.25 basis point increase to the interest rate, rather than the 0.5 basis point increase some other Fed members have suggested. 

Ian Shepherdson, chief economist at Pantheon Macroeconomics said, “We think it likely that the next forecasts, due three weeks from now, would have shown five or even six [interest rate] increases this year, before the invasion of Ukraine. Now, we’d be very surprised to see six tightenings, and some of the wilder market forecasts now look adrift. We never expected a 50bp [basis point] move in March, and it looks even less likely now.”

Highlights 

  • The Mortgage Banker Association (MBA) said Wednesday that weekly mortgage application volume declined by 0.7% during the week ended Feb. 25. This followed a 13.1% plunge during the prior week.
  • ADP said Wednesday that private payrolls grew by 475,000 in February, coming in 100,000 greater than consensus economists were expecting
  • Shares of Ford (F) rose by about 5% Wednesday morning after the automaker announced plans to separate its electric vehicle and legacy internal combustion businesses into two separate units. The move confirms a report from Reuters last week
  • Netflix (NFLX) has temporarily stopped all future projects and acquisitions in Russia amid its invasion of Ukraine, Variety reported on Wednesday.
  • Apple Inc will host its annual spring product launch event on March 8. The company is expected to launch a low-cost version of the iPhone SE with 5G, a new version of the iPad Air and a high-end Mac Mini.
  • Alphabet Inc’s Google said on Tuesday that it has blocked mobile apps connected to Russian state media.
  •  Netflix has offered to buy publicly listed Finnish Next Games, the mobile games company said in a statement on Wednesday. “We are excited for Next Games to join Netflix as a core studio in a strategic region and key talent market, expanding our internal game studio capabilities,” said Netflix’s Vice President of games Michael Verdu.
  • Nvidia has confirmed that it was hacked — and that the actor behind last week’s “incident” is leaking employee credentials and proprietary information onto the internet. In a statement to PCMag, Bloomberg, and VideoCardz, the company says it became aware of the breach on February 23rd, and that it does “not anticipate any disruption to [its] business or our ability to serve our customers as a result of the incident.”

“Many of life’s failures are people who did not realize how close they were to success when they gave up.” -Thomas A. Edison