Stocks End Lower In Volatile Amid Russia-Ukraine Uncertainty
5:02 pm Tuesday, February 22nd, 2022
U.S. equities pared back some losses as U.S. President Joe Biden joined allies in announcing a new tranche of sanctions on Russia after his counterpart Vladimir Putin recognized two separatist republics in eastern Ukraine and ordered troops sent to them.
Russia recognized yesterday the independence of Ukraine’s Donetsk and Luhansk regions and ordered “peaceful” troops to the oblasts, which the White House is labeling as an invasion. The U.S., UK, and EU have announced initial sanctions, and Germany said it would stop the approval process for the Nord Stream 2 pipeline from Russia.
The consumer discretionary sector is the weakest performer amid a 9% decline in Home Depot (HD) following its earnings report. HD beat expectations but provided conservative FY22 sales guidance, acknowledging slower year-over-year growth.
The energy sector (-1.4%), which was up 3% shortly after the open, is now trading lower by 1.4% as oil prices remain elevated above $92 per barrel. The utilities sectoris the lone sector clinging onto a slim gain.
Strikingly, the Treasury market isn’t exhibiting a flight to safety. The 10-yr yield is unchanged at 1.93% despite the geopolitical angst while the 2-yr yield is up six basis points to 1.53% on continued expectations for the Fed to stick with the tightening script.
Fed Governor Bowman (FOMC voter) said yesterday that she supports a March rate hike in addition to further rate increases in the coming months if the economy evolves as expected. On a related note, preliminary IHS Markit Manufacturing and Services PMIs for February showed an uptick in expansionary activity.
The CBOE Volatility Index is brushing up against 30.00 on increased interest to protect against further downside. The S&P 500 is trading near its lowest closing level since last October.
