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The Fed’s first monetary policy meeting of 2022, ending Wednesday, will be a highlight this week.
Dreamstime
The stock market was down sharply Monday morning, as investors responded to Russia’s military aggression near Ukraine and awaited a Federal Reserve decision later in the week.
Shortly after the open, the
Dow Jones Industrial Average
dropped 400 points or 1.2%, after a 450 point-fall Friday to end at 34,265. The
S&P 500
was down 1.4%, with the
Nasdaq Composite
sliding 1.7%.
The North Atlantic Treaty Organization is sending ships and jet fighters to eastern Europe in response to Russia’s military build-up near Ukraine. The European Union also plans to provide loans and grants totaling more than $1 billion to Ukraine.
The stock market has also been concerned about tighter monetary policy. Traders expect four interest rates hikes in 2022, which the Federal Reserve would implement to curb inflation, a move that could choke off economic growth. Plus, bond yields have risen this year, partially a response to the Fed ending its bond-buying program. That makes future profits less valuable, causing stock valuations to decline.
The S&P 500, Dow and Nasdaq are down 9.5%, 7.9% and 15.5% respectively from their all-time highs.
That brings the Fed into focus this week. The central bank will make a decision on interest rates this Wednesday. Although markets don’t expect a rate hike until March, investors will be watching the bank’s statement to see if a March hike is now more or less likely.
“The main market highlight this week will be the Federal Reserve’s first monetary policy decision of the year on Wednesday,” said Jim Reid, a strategist at Deutsche Bank.
Also within the next two weeks,
Apple
(ticker: AAPL), Amazon.com (AMZN),
Microsoft
(MSFT),
Alphabet
(GOOGL) and
Tesla
(TSLA) will report earnings. If those stocks post large moves on earnings, they will move the S&P 500 and Nasdaq in one direction or the other, as those stocks are worth a combined several trillion dollars.
Overseas, traders in Europe and Asia took their cues from the weak trading on Wall Street last Friday. The pan-European
Stoxx 600
was down 3% and the Hong Kong
Hang Seng Index
ended Monday 1.2% in the red.
In the commodity space, crude prices were rising after they, too, were caught up in the selloff Friday. Futures contracts for West Texas Intermediate fell 0.2% to just below $85 a barrel.
Cryptocurrencies were deeper into the red. A stark selloff in cryptos at the end of the week was driven by a possible ban in Russia, as well as the general market mood on risky assets.
Bitcoin,
the leading digital asset, was trading above $43,000 last Thursday, according to data from CoinDesk, and has since fallen to below $35,000. It was down almost 4% in the last 24 hours. It was worse for smaller peer
Ether,
which was down almost 8% over the past day to around $2,300. The token underpinning the Ethereum network was changing hands above $3,200 last Thursday.
Here are six stocks on the move Monday:
Kohl’s
(KSS) shot up 31% following a spate of news reports, including from Reuters, which cited anonymous sources, that the retailer may soon receive a second takeover offer. That has sent shares of
Macy’s
(M) and
Nordstrom
(JWN) up 7.2% and 3.6%, respectively.
Unilever
(UL) lifted 6.4% following a report from the Financial Times, citing anonymous sources, which said activist hedge fund Trian Partners had built a stake in the consumer goods giant.
Snap
(SNAP) stock fell 6.6% after getting downgraded to Neutral from Outperform at Wedbush.
Netflix
(NFLX) stock declined 3.7% after falling 22% Friday on a dim subscriber growth outlook. Monday, the stock was downgraded to Hold from Buy at Jefferies.
Write to Jack Denton at jack.denton@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com
