U.S. stocks fell on Friday,4th March 2022, after gaining on the back of stronger than expected jobs data.
The jobless rate edged down to 3.8%, while total nonfarm payrolls increased by 678,000 (423,000 estimate) plus upward revisions for the 2 prior months.
Average hourly earnings had little changed from last month, but it rose by 5.1% from a year ago, adding to inflation worries.
But alas, the Russian invasion of Ukraine took center stage again as it showed signs of matters getting out of control. The fire at Europe’s largest nuclear plant, albeit outside the reactor area was the catalyst for some heavy selling.
In addition, the U.S. considering a ban on imports of Russian oil, kept the crude oil price up to around $115 per barrel, spelling more trouble on the inflation front.
For the week, the Dow and S&P each fell by 1.3% while the Nasdaq fell by 2.8%
Here are the closing levels on Friday, 4th March 2022: –
| Last | Change | %Change | |
| Dow Jones | 33,614.80. | -179.86. | -0.53% |
| S&P 500 | 4,328.87 | -34.62. | -0.79% |
| Nasdaq Comp | 13,313.44. | -224.50. | -1.66% |
| U.S. 10Y | 1.73% | ||
| VIX | 31.98 | +1.50 | +4.92% |
Fed Chairman Powell all but guaranteed a 25 basis point hike at its next meeting. He added that they are prepared to raise more than that if inflation does not come down and also reducing their balance sheet this year.
This should keep the bulls at bay as some were hoping the Fed will hold back its plans due to the war.
On the subject of the war in Ukraine, Russia does not seem to want to back down regardless of the damage the sanctions have inflicted on its economy. In fact, it may be difficult for Putin to change course as it will be a huge loss of face for him. Most would argue that his pride is more important to him than the economy.
It looks like Russia did not expect such resistance from Ukraine and with the U.S. and some European nations offering weapons and jets to Ukraine. Thus, this could frustrate the Russians even more making them more unpredictable.
Ultimately, it will definitely keep the markets volatile in the near term with ups and downs exaggerated by news flow.
At the same, technical levels warn a further downside. Unless Russia pulls out of Ukraine, it would be wise to not get excited about any rallies that might occur during this volatile period.
Source: CBOE, Bloomberg
This commentary is written by James Gomes
James has been in the finance industry for over 30 years and most recently worked for a large U.S. bank for more than 20 years.
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