Walmart rises after strong earnings, dividend boost
U.S. stocks ended sharply lower Thursday, as investors dealt with renewed fears of a Russian invasion of Ukraine as the U.S. and its allies accused Moscow of continuing to build up troop levels.
How did stock indexes perform?
- The Dow Jones Industrial Average DJIA dropped 622.24 points, or 1.8%, to close at 34,312.03, its largest one-day point and percentage drop since Nov. 30.
- The S&P 500 SPX slumped 94.75 points, or 2.1%, to finish at 4,380.26.
- The Nasdaq Composite COMP tumbled 407.38 points, or 2.9%, to finish at 13,716.72. Losses for the S&P 500 and Nasdaq were the largest since Feb. 3.
On Wednesday, a mixed session saw the S&P 500 gain 0.1%, while the Dow slipped 0.2% and the Nasdaq Composite fell 0.1%.
What drove the market?
Markets continue to be driven by Ukraine-Russia headlines, with NATO accusing Moscow of misleading the world over troop withdrawals, saying that country had instead moved in about 7,000 additional soldiers, though Russia still claimed it was withdrawing troops.
“U.S. stocks did not stand a chance today as risk aversion violently returned on growing fears of a Russian invasion of Ukraine and after an impressive earnings report from Walmart suggested the consumer is strong and paves the way for potential aggressive Fed tightening,” said Edward Moya, senior market analyst at Oanda, in a note.
“The risks for a military conflict at Ukraine border appear to be rising and that has many investors entering de-risking mode,” he said.
Read: Here’s the technology being used to watch Russian troops as Ukraine invasion fears linger
Russian-backed separatists in Ukraine have accused government forces of opening fire on them. The U.S. and its allies have accused Russia of planning to use false reports of attacks on separatists as a pretext for an invasion. The Wall Street Journal reported Thursday that Russia has filed a report with the United Nations alleging that Ukraine’s military has committed “crimes” against residents of the eastern Donbas region.
“This is likely to be the bigger concern for NATO and the U.S., if separatist forces try and goad Ukrainian forces into a counter-response, thus creating an excuse for a Russian incursion, and for all hell to break loose,” said Michael Hewson, chief market analyst at CMC Markets UK, in a note.
President Joe Biden told reporters Thursday morning that a Russian invasion could happen in the next “several days.” U.S. Secretary of State Antony Blinken, addressing the U.N. Security Council, called on Russia to withdraw troops and to resume negotiations over security concerns.
Investors sifted through a batch of U.S. economic data, including a rise in first-time jobless claims, a January fall in housing starts and a fall in the Philadelphia Fed’s regional manufacturing index.
St. Louis Federal Reserve President James Bullard, who has called for more aggressive rate increases than his colleagues, on Thursday said too much “mindshare” has been devoted to the idea that inflation will moderate at some point.
Wednesday’s minutes of the January Federal Reserve meeting provided few new details for investors who are now pricing about six interest rate increases this year, but investors are becoming concerned that the Fed may not be able to slow inflation without slowing the economy. Fed officials will have another round of inflation and employment data before making their decision next month.
Which companies were in focus?
- Shares of Tesla Inc. TSLA fell 5.1% after news that U.S. highway safety authorities opened up an investigation into “phantom braking.”
- Shares of Walmart Inc. WMT were in focus, rising 4% after reporting fourth-quarter profit and sales that beat expectations and raising its dividend.
- Palantir Technologies Inc. PLTR grew revenue more quickly than anticipated in its latest quarter, though earnings per share fell short of expectations. Shares fell nearly 15.7%.
- Cisco Systems Inc. CSCO reported fiscal second-quarter results that came in slightly above Wall Street estimates and offered encouraging guidance despite lingering investor concern over supply-chain issues. Shares rose 2.7%.
- Fastly Inc. FSLY shares tumbled by a third after the cloud-software company late Wednesday predicted 2022 revenue growth would slow down more than analysts expected.
- Chip maker Nvidia Corp. NVDA offered a strong forecast despite supply constraints late Wednesday, after doubling profits and producing record sales in the holiday quarter. Still, shares fell 7.5% on Thursday.
What did other assets do?
- The yield on the 10-year Treasury note BX:TMUBMUSD10Y fell 7.2 basis points to 1.972%. Yields and debt move opposite prices.
- The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, edged up 0.1%.
- Oil futures fell, with the U.S. benchmark CL losing 2% to close at $91.76 a barrel on the New York Mercantile Exchange. Gold futures GC00 rose 1.6% to settle at $1,902.70 an ounce, the highest since June.
- The Stoxx Europe 600 XX:SXXP fell 0.7%, while London’s FTSE 100 UK:UKX lost 0.9%.
- The Shanghai Composite CN:SHCOMP edged up 0.1%, while the Hang Seng Index HK:HSI rose 0.3% in Hong Kong and Japan’s Nikkei 225 JP:NIK fell 0.8%.