Stock Market

U.S. stocks mixed as Dow, S&P 500 aim for biggest weekly gain since November 2020

U.S. stocks put in a mixed performance Friday morning, with major indexes headed for their best weekly performance since November 2020 as investors took a Fed interest rate hike and uncertainty over the Russia-Ukraine war in stride.

Volatility in markets has become the norm this month as investors struggle to forecast economic growth and corporate profitability amid high inflation, rising interest rates from central banks around the world, Russia’s invasion of Ukraine, and ongoing lockdowns to combat Covid-19 in China.

How are stock indexes trading?
  • The Dow Jones Industrial Average
    DJIA,
    -0.22%

    fell 124 points, or 0.4%, to 34,356.

  • The S&P 500
    SPX,
    +0.21%

    shed 2 points, or less than 0.1%, to trade at 4,410.

  • The Nasdaq Composite
    COMP,
    +0.90%

    was up 62 points, or 0.5%, at 13,677.

Need to Know: The banks to buy are outside the U.S., even with the Fed eyeing 11 rate increases, these fund managers say

What’s driving the markets?

All three major U.S. indexes remained set for big weekly gains, with the S&P 500 up around 5%, the Dow industrials rising around 4.4% and the Nasdaq Composite on track for a 6.6% advance — those would be the strongest weekly rises for all three since the week ended Nov. 6, 2020, according to Dow Jones Market Data.

Investors were weighing hawkish comments from central bankers. St. Louis Federal Reserve President Jim Bullard said the central bank risked losing credibility by moving too slowly to bring inflation down. Bullard, in a statement, explained his lone dissent at Wednesday’s Fed meeting, when he called for a 50 basis-point rise in the fed-funds rate rate. Bullard said he wants to see key rates at 3% by year-end.

Fed Gov. Chris Waller, meanwhile, told CNBC the central bank may need to enact one or more 50 basis-point rises in response to surging inflation.

At its meeting this week, the Fed increased benchmark interest rates by 25 basis points as expected, promising more, with Fed Chairman Jerome Powell cheering investors with an optimistic view of the economy. U.S. data for Friday includes existing home sales and leading indicators, both for February.

Read: Oil prices are the ‘linchpin’ for markets as Russia wages war on Ukraine, says CIO Bob Doll

Investors had previously been encouraged by signs of potential progress between Ukraine and Russian negotiators, but those hopes were fading some ahead of the weekend. U.S. Secretary of State Antony Blinken reportedly said in a briefing Thursday that a diplomatic solution to the war in Ukraine was looking challenging, as Russia shows no signs of letting up its attacks.

“It’s becoming increasingly obvious that Russia’s interest in a negotiated agreement probably doesn’t extend beyond optics, and that it isn’t serious about a cessation of hostilities,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.

“There is also the added complication that any cease-fire would require a major climbdown from one side or the other, and with their respective positions still being miles apart, and Russia still targeting civilians, an imminent de-escalation doesn’t look likely at this point,” he said.

Fresh attacks by Russian forces hit the western city of Lviv and the capital Kyiv. Its forces have been blamed for an attack this week on a theater in devastated Mariupol serving as a shelter and clearly been marked as “children inside.”

And new report by the U.S. Defense Intelligence Agency warned that an increasingly desperate President Vladimir Putin could threaten the West with nuclear weapons to try to turn the tide, Bloomberg News reported.

President Joe Biden was expected to warn his China counterpart Xi Jinping that providing military or economic assistance for Russia’s Ukraine invasion will lead to severe consequences.

Friday also marks a “massive” quarterly options expirations on Friday for derivatives such as options on equity futures, noted the Saxo Bank Strategy team. “Hedging related to derivatives with some $3.5 trillion in underlying exposure could explain some of the price action in U.S. equity markets this week ahead of today’s options expiration,” they said in a note to clients.

“In addition, options with strike prices near the current S&P level are said by some sources to be the largest in years,” the strategists said.

What companies are in focus?
How are other assets trading?
  • U.S. crude futures
    CL00,
    -1.02%

    CL.1,
    +0.50%

    CLJ22,
    +0.50%

    rose 1% to trade around $102.66 a barrel.

  • The yield on the 10-year Treasury note 
    TMUBMUSD10Y,
    2.148%

    dropped 3.6 basis points to 2.154%. Yields and debt prices move opposite each other.

  • The ICE U.S. Dollar Index 
    DXY,
    +0.44%
    ,
     a measure of the currency against a basket of six major rivals, rose 0.5%.

  • Gold futures 
    GC00,
    -0.38%

    fell 0.4% to trade near $1,935 an ounce.

  • Bitcoin 
    BTCUSD,
    -0.16%

    was down 1.1% to trade near $40,500.

  • The Stoxx Europe 600 
    SXXP,
    +0.48%

    rose 0.2% while London’s FTSE 100 
    UKX,
    -0.02%

    dropped 0.2%.

  • Hong Kong’s Hang Seng Index 
    HSI,
    -0.41%

    fell 0.4%, while the Shanghai Composite 
    SHCOMP,
    +1.12%

    rose 1.1% and Japan’s Nikkei 225 
    NIK,
    +0.65%

    advanced 0.7%.

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