Stocks extended declines Friday to close a second straight week in negative territory with geopolitical tensions intensifying to contribute to a further risk-off tone in markets.
The S&P 500 fell 0.71{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to 4,348.97, building on a 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} loss in the previous session, while the Dow Jones index closed down 0.68{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to 34,079.12 after erasing 1.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} Thursday for its worst day in nearly three months. The Dow also closed at its lowest level since September. The Nasdaq Composite shed 1.23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} to 13,548.07 — its lowest level since January. Meanwhile, the CBOE Volatility Index (VIX), or “fear gauge,” spiked back to hover near 28 Friday.
The souring in sentiment came after U.S. officials said they estimated Russia had built up around 190,000 military personnel near Ukraine, raising the specter of a near-term attack. And this came a day after President Joe Biden told reporters on Thursday that the threat of a Russian invasion of Ukraine was “very high” in the coming days. Crude oil prices fell Friday morning to pause a recent run-up even as Russia-Ukraine tensions resurged.
“The two things we’re most concerned about right now in terms of headwinds for the market and causes for volatility, are clearly tensions with Russia-Ukraine … and then clearly, our concern over not just inflation but what the monetary policy response to that inflation is going to be,” Art Hogan, National chief market strategist, told Yahoo Finance Live on Thursday. “And those headlines have changed quite a bit too.”
“We’ve gone from thinking the Fed would be very, very deliberate in their actions starting in March and telegraph everything … to having some outliers on the committee talking about being very aggressive, a lot more aggressive than what’s priced into the market,” he added. “Every day the story changes a bit.”
Treasury yields fell further after dropping across the curve on Thursday, with the 10-year yield holding back below 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. This came as markets priced in a lower probability of a front-loaded 50 basis-point interest rate hike from the Federal Reserve in March, with investors looking past hawkish commentary from St. Louis Fed President James Bullard calling for a more aggressive path on interest rates.
Other strategists also underscored the dual concerns around Russia and Ukraine and on the Fed for markets in the near-term.
“Really, it’s about Russia and Ukraine, and it’s about the Fed. And on the geopolitical side, I think the challenge for investors is that geopolitical risk is just really hard to weigh,” James Liu, Clearnomics founder and CEO, told Yahoo Finance Live on Thursday. “Our view is that we’re not yet in a situation where it makes sense to make any real portfolio moves based on this. I mean, first of all, diplomatic channels are still open, so the situation is still evolving on a regular basis.”
“The challenge is that even if the worst case scenario were to happen, it’s hard to gauge exactly what the impact long-term would be on the markets,” he added.
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4:00 p.m. ET: US stocks mark second straight losing week amid Russia-Ukraine turmoil
Here were the main moves in markets at the end of Friday’s session:
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S&P 500 (^GSPC): -31.29 (-0.71{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,348.97
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Dow (^DJI): -232.91 (-0.68{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 34,079.12
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Nasdaq (^IXIC): -168.65 (-1.23{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 13,548.07
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Crude (CL=F): -$0.18 (-0.20{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $91.58 a barrel
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Gold (GC=F): -$4.70 (-0.25{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,897.30 per ounce
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10-year Treasury (^TNX): -4 bps to yield 1.9320{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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10:52 a.m. ET: ‘Underlying inflation appears to be well-anchored’: Evans
Chicago Fed President Charles Evans suggested on Friday that absent pandemic and supply chain disruptions, underlying price pressures were still consistent with the Federal Reserve’s targets and did not warrant an extreme policy response.
“By my reading underlying inflation appears to still be well anchored at levels consistent with the Fed’s average 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} objective,” Evans said during a University of Chicago Booth School of Business conference on Friday.
“I see our current policy situation as likely requiring less ultimate financial restrictiveness compared with past episodes and posing a smaller risk” to economic activity, he added.
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10:02 a.m. ET: Existing home sales post surprise jump in January, inventory sinks to record low
Sales of previously owned homes in the U.S. posted an unexpected jump at the beginning of 2022, reversing declines from the prior month.
Existing home sales rose at a seasonally adjusted annualized rate of 6.5 million in January, according to the National Association of Realtors (NAR). This represented a 6.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} month-on-month increase, following a 3.8{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} drop in December. Still, sales were down 2.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} from the same month last year, when low interest rates stoked demand for purchases.
Housing inventory slid by 16.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year to 860,000, marking a record low since NAR began tracking the data in 1999. Tight supplies pushed prices higher, and the median existing-home price rose 15.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} over last year to $350,300.
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10:46 a.m. ET: ‘Underlying inflation appears to still be well-anchored: Evans
Chicago Federal Reserve President Charles Evans suggested Friday that the Federal Reserve’s current monetary policy setting was “wrong-footed against the current, sharp increases in inflation,” and suggested price pressures would subside without extreme moves by the Fed.
“I see our current policy situation as likely requiring less ultimate financial restrictiveness compared with past episodes and posing a smaller risk” to economic growth, Evans said during a University of Chicago Booth School of Business conference. He noted that in absence of pandemic and supply chain impacts, “underlying inflation appears to still be well-anchored at levels consistent with the Fed’s average 2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} objective.”
Evans’. —
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9:30 a.m. ET: Stocks mixed amid mounting Russia-Ukraine concerns
Here’s where markets were trading shortly after the opening bell:
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S&P 500 (^GSPC): +4.64 (+0.11{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,384.90
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Dow (^DJI): -43.35 (-0.16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 34,258.30
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Nasdaq (^IXIC): +23.65 (+0.17{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 13,740.37
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Crude (CL=F): -$2.53 (-2.76{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $89.23 a barrel
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Gold (GC=F): -$3.20 (-0.17{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,898.80 per ounce
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10-year Treasury (^TNX): -3.2 bps to yield 1.942{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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8:50 a.m. ET: Stocks turn negative as officials signal Russian military build near Ukraine
Stock futures erased earlier gains to trade in negative territory with just over 30 minutes until the opening bell.
Contracts on each of the S&P 500, Dow and Nasdaq turned lower. Investors turned into safe haven assets, and Treasury yields fell as prices were bid higher. The Vix spiked back above 28 after falling below 27 earlier Friday morning.
News that Russia had amassed some 190,000 military personnel near Ukraine contributed to the decline, erasing earlier optimism that diplomatic talks would lead to a deescalation of the tensions in the region. Earlier, the U.S. State Department had said Russian Foreign Minister Sergei Lavrov and U.S. Secretary of State Antony Blinken would meet next week.
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7:24 a.m. ET Friday: Stock futures point to a higher open
Here’s where markets were trading Friday morning:
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S&P 500 futures (ES=F): +21 points (+0.48{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,395.50
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Dow futures (YM=F): +124.00 points (+0.36{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 34,355.00
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Nasdaq futures (NQ=F): +91 points (+0.64{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 14,255.75
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Crude (CL=F): -$1.92 (-2.09{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $89.84 a barrel
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Gold (GC=F): -$9.10 (-0.48{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,892.90 per ounce
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10-year Treasury (^TNX): -0.2 bps to yield 1.972{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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6:10 p.m. ET Thursday: Stock futures extend declines after rout
Here were the main moves in markets Thursday evening:
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S&P 500 futures (ES=F): -5.25 points (-0.12{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 4,369.25
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Dow futures (YM=F): -24 points (-0.07{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}), to 34,207.00
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Nasdaq futures (NQ=F): -24.75 points (-0.17{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 14,140.00
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter
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