The U.S. stock market will likely remain under pressure today as the war between Russia and Ukraine continues to escalate, creating political, humanitarian, and economic problems across the globe. The situation has sent the price of crude oil to about $125 a barrel, which will clearly contribute to the inflationary challenges that have been worrying economists, the Federal Reserve, and ultimately, investors.
In economic news, there are no major reports scheduled for today. Tomorrow, we will get a look at the nation’s trade balance, which is expected to show a deficit of roughly $87 billion for the month of January. On Thursday, the Consumer Price Index (CPI) for February will be reported; given Wall Street’s concerns about inflation, this issuance should receive considerable attention. A large increase in prices would certainly add strength to the argument that the Federal Reserve must act aggressively. The majority of investors think the central bank will lift interest rates when it meets this month, followed by further increases later this year. The Fed has displayed considerable patience, hoping that inflation might be transitory, and would improve on its own as supply-chain disruptions ease and the economy reopens. Unfortunately, the problem has proven persistent.
On the corporate front, few widely followed companies will be posting quarterly profit reports today. Tomorrow, we will hear from Dick’s Sporting Goods (DKS), and on Wednesday Campbell Soup (CPB) will weigh in with its numbers. Later this week, Oracle (ORCL), one of the largest names in the technology sector, will deliver its results.
On a technical level, stocks have been quite volatile lately, but have not managed to make any real progress. The S&P 500 Index is still stuck below its 200-day moving average, located around the 4,460 level. In addition, there seems to be a lack of broad leadership in the market. Clearly, the energy and basic materials sectors have helped support the major averages, but there has been considerable weakness elsewhere. The current market climate continues to put a damper on investor sentiment. The Volatility Index (VIX)—which measures the magnitude of price movements in the S&P 500—recently moved above the 30 mark, indicating that traders are feeling unsettled about the situation and are likely taking a defensive posture. – Adam Rosner
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.
