U.S. stocks fell on Friday, 11th March 2022, as no progress has been made in the negotiations between Russia and Ukraine. In the latest round of sanctions, the U.S. bars imports of Russian vodka, caviar, and diamonds. Biden also called on U.S. lawmakers to join Western allies in revoking the country’s preferential trade status of Russia. This would mean higher tariffs on Russian goods.
On Friday, U.S. consumer sentiment numbers fell to the lowest since 2011, while inflation expectations rose to a 40-year high.
The University of Michigan’s sentiment index dropped to 59.7, from 62.8 in February.
The median estimate of economists in a Bloomberg survey called for a reading of 61.
Consumers expect prices to rise 5.4% over the next year, the highest reading since 1981, according to the data.
During this interval, the Dow Jones averaged notched its fifth consecutive week of losses, down by 2%, while the S&P sank 2.9% and the Nasdaq fell 3.5%.
Here are the closing levels on Friday, 11th March 2022: –
| Last | Change | %Change | |
| Dow Jones | 32,944.19 | -229.8. | -0.69% |
| S&P 500 | 4,204.31 | -55.21. | -1.30% |
| Nasdaq Comp | 12,843.81 | -286.15. | -2.18% |
| U.S. 10Y | 1.99% | ||
| VIX | 30.75 | +0.52 | +1.72% |
The market, specifically the bulls are getting punished by the events relating to the Russian invasion. Whenever there is positive news with regards to negotiations or that the saga will end soon, the markets then rally. Following that, there will be some news that sends the market lower.
That said, the expectation of a bottom being formed soon is slowly eating away and new lows are within sight.
With the inflation story, plus commodity prices going crazy, and things are not looking good for bulls. According to this article, it talks about the possibility of the 1970’s type of stagflation the economists are worried about because of rising commodity prices.
Through and through, I will reiterate that it would be wise not to get too excited about any rallies until the Russian invasion is reversed.
At the moment, it does not look like that will be happening any time soon.
And yes, there could be times when the market can rally 2 or 3% but the VIX at >30 suggests the opposite is also likely so be prepared for more volatile sessions.
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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