Psycho’s Market Recap – March 4, 2022

Stocks fell Friday to post their fourth straight week in the red as market participants continue to digest the global economic fallout from Russia’s war in Ukraine and fresh labor data that suggests the labor market is recovering faster than originally expected. The volatility index (VIX) spiked to the highest level since March 2020 in the morning before cooling off.

Oil posted its biggest weekly gain on record with prices swinging in a $20 range since Russia invaded Ukraine and sparked fears of a major supply crunch.

Markets Today 

  • S&P 500 (SPY): -0.81%
  • Nasdaq (QQQ): -1.45%
  • Dow Jones (DIA): -0.49%
  • Russell 2000 (IWM): -1.57%
  • Volatility Index (VIX): +4.92%
  • WTI crude oil futures: +6.81%
  • Microsoft (MSFT): -2.05%
  • NVIDIA (NVDA): -3.28%
  • Rivian (RIVN): -6.91%
  • Snowflake (SNOW): -6.41%
  • VanEck Russia ETF (RSX): -2.42%
  • Occidental Petroleum (OXY): +17.80%
  • Gold Miners ETF (GDX): 4.16%

New job data reaffirmed that the US economy has recovered enough to allow Fed to start tightening and raise the federal funds rate in the March 16 meeting. The Labor Department’s February jobs report showed a greater-than-expected 678,000 jobs returned last month, with employment growth accelerating after Omicron-related cases retreated in the U.S. The unemployment rate improved to 3.8%, the lowest since February 2020 before the pandemic. This mirrored the much better-than-expected private payrolls data out from ADP earlier this week.

In good news, in the US, coronavirus cases have declined enough for the Center for Disease Control and Prevention to roll back mask guidelines and say that 90% of the US population live in areas where masks are no longer required. After cases spiking to a high of nearly one million new cases per day in mid-January, COVID cases have dropped 90%. The U.S. reported an average of nearly 58,000 new infections on Wednesday, compared with the peak of more than 802,000 on Jan. 15, according to data from Johns Hopkins University.

https://www.reuters.com/world/us/cdc-more-than-90-us-population-areas-where-can-skip-wearing-masks-2022-03-03/

And already, Fed officials have declared victory on fulfilling their employment mandate for the economy. In congressional testimony this week, Fed Chair Jerome Powell said that most Federal Open Market Committee (FOMC) members would agree that the labor market in the U.S. is now at a level consistent with maximum employment. As a reminder, the Fed operates with a dual mandate to promote maximum employment and maintain inflation under control. This signals the Fed is ready to begin its tightening cycle to fight rising inflation. 

Earlier in the week, Powell gave his semi-annual monetary policy testimony before Congress, where he said he was “inclined” to support a 25 basis point interest rate hike at the Fed’s March meeting.

Inflationary concerns have only compounded as crude oil prices spiked to hover at multi-year highs, with both West Texas Intermediate and Brent crude oil prices rising more than 40% for the year-to-date and spiking to a decade high.

Highlights

  • Disney (DIS) said Friday it will introduce an ad-supported version of Disney+ streaming to consumers later this year, creating a cheaper option for consumers as the company continues to scale.
  • Apple (AAPL) CEO Tim Cook said during the company’s annual investor day Friday that the iPhone-maker would continue to offer annual dividend increases to shareholders. 
  •  Tesla has received a conditional license to begin production at its electric vehicle (EV) factory and adjacent battery plant in Gruenheide, Germany, the local environmental ministry in Brandenburg said on Friday.
  •  Apple Inc shareholders approved Chief Executive Officer Tim Cook’s annual compensation in a virtual meeting on Friday
  • Japan’s Panasonic is reportedly looking to purchase land in the United States for a mega-factory to make a new type of electric vehicle (EV) battery for Tesla Inc, public broadcaster NHK reported on Friday.
  • Tesla Inc Chief Executive Officer Elon Musk said on Thursday he was inviting labor union United Auto Workers (UAW) to hold a vote at the electric carmaker’s California factory.
  • Shares of Snowflake (SNOW) collapsed 30% after-hours after the company forecasted slowing growth moving forward.
  • Netflix has offered to buy publicly listed Finnish Next Games, the mobile games company said in a statement on Wednesday.

“Don’t judge each day by the harvest you reap but by the seeds that you plant.” –Robert Louis Stevenson