The U.S. stock market seems poised for a mixed opening this morning as traders continue to closely monitor the war between Russia and Ukraine. The situation there has become quite dire, but there are glimmers of hope that the current round of talks might result in a diplomatic resolution. On our shores, investors will turn their attention to the latest economic developments and the Federal Reserve’s evolving monetary policy.
In economic news, no major reports are due out this morning. Tomorrow, the Producer Price Index (PPI) for the month of February will be published, and an increase in this key measure of inflation is widely anticipated. There is little doubt that prices for many goods and services have been rising lately, due to a strong economic backdrop combined with labor shortages and supply-chain problems. On Wednesday, Wall Street will paying close attention as the central bank wraps up its two-day meeting and weighs in with an interest-rate decision. Most investors expect a slight increase in rates will be approved this week. In addition, many traders will want to see how the Federal Reserve views the events transpiring overseas. Of note, severe sanctions and punitive moves by major corporations are starting to cripple Russia’s economy, while also causing major disruptions and higher prices in the energy sector.
In the corporate arena, not many widely-followed companies will be posting profits reports today or tomorrow. On Wednesday, Jabil (JBL), a leading technology manufacturer, and Lennar (LEN), a major home builder, weigh in with their numbers. On Thursday, FedEx (FDX), one of the largest names in the transportation sector, will deliver its results. Many investors will likely be watching this report to see how the package delivery giant is coping with the current inflationary environment.
On a technical level, the S&P 500 Index is currently sitting about 12% below the high ground reached at the end of 2021. Although the decline does not seem that severe, it should be noted that numerous issues, particularly in the technology sector, are down significantly more than the broader market average. Many of the high flying names that led the market higher a few months ago are no longer finding support in the current market environment, and it may take some time before investors are willing to return to these more dynamic issues. For now, the less exciting, but more predictable, stocks seem to be in fashion.
– Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
