Stocks Down As Geopolitical Factor Flips Negative
5:02 pm Wednesday, February 16th, 2022
U.S. stocks fell on Wednesday, with the tech-heavy Nasdaq leading losses after stronger-than-expected retail sales data gave the Federal Reserve more ammunition to tighten policy, while geopolitical tensions over Russia and Ukraine added to caution.
Contrary to Russia’s claims yesterday about withdrawing some troops, Ukraine President Zelensky said he hasn’t seen a withdrawal while NATO officials are saying that Russia is instead building up forces near Ukraine. The Wall Street Journal recently reported that U.S. and Russian aircraft flew dangerously close to each other in three separate incidents over the weekend.
Stocks pushed to session lows following that report from The Wall Street Journal, as it raised concerns about further U.S. involvement in a situation that could potentially get worse. Presently, ten of the 11 S&P 500 sectors are trading lower with information technology (-1.4%) and communication services (-1.1%) down more than 1.0%.
The energy sector, unsurprisingly, is up 1.5% as oil prices top $94 per barrel amid geopolitical angst. The latter has taken precedent over an unexpected build in weekly crude inventories (1.12 million).
Growth stocks, meanwhile, are under additional pressure following the disappointing earnings reactions in Roblox (RBLX) and Shopify (SHOP), as well as a multi-year initiative from Google to build more private advertising solutions.
The Russell 3000 Growth Index is down 1.3%, versus an 0.4% decline in the Russell 3000 Value Index.
Separately, the Treasury market has not reacted to the better-than-expected Retail Sales report for January or the continued upwards pressure in Export/Import Prices for January. That could be because of the geopolitical factor that has not only mitigated selling pressure but also led some to believe that the Fed may not be as aggressive in March due to the geopolitical uncertainty.
The 2-yr yield is down four basis points to 1.53%, and the 10-yr yield is down one basis point to 2.04%. The U.S. Dollar Index is down 0.2% to 95.80.
