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Market Snapshot

https://www.briefing.com/stock-market-update

Dow 32817.38 -797.42 (-2.37%)
Nasdaq 12830.96 -482.48 (-3.62%)
SP 500 4201.09 -127.78 (-2.95%)
10-yr Note -25/32 1.771
NYSE Adv 658 Dec 2554 Vol 1.4 bln
Nasdaq Adv 1208 Dec 2759 Vol 6.1 bln

Industry Watch
Strong: Energy, Utilities
Weak: Consumer Discretionary, Information Technology, Communication Services, Financials, Materials

Moving the Market

-- Higher oil prices fuel slowdown concerns

-- Oil prices hit $130 per barrel last night as U.S. and allies discuss ban on Russian oil imports, but settle just below $120 per barrel

-- Foreign ministers of Russia and Ukraine agree to meet on Thursday, Germany opposes ban on Russian energy imports

Stocks drop as higher oil fuels slowdown concerns
07-Mar-22 16:20 ET
Dow -797.42 at 32817.38, Nasdaq -482.48 at 12830.96, S&P -127.78 at 4201.09

[BRIEFING.COM] The S&P 500 dropped 3.0% on Monday, as investors remained concerned about the Russia-Ukraine situation and an accompanying increase in oil prices ($119.27, +4.00, +3.5%). The Nasdaq Composite underperformed with a 3.6% decline while the Dow Jones Industrial Average (-2.4%) and Russell 2000 (-2.5%) fell closer to 2.5%.

The session started on a flattish note, overcoming a 2% drop in the futures market, as oil prices went from $130/bbl on Sunday evening to below $120/bbl prior to the open.

The initial spike in oil (+12%) was catalyzed by news that the U.S. and allies were discussing a ban on oil imports from Russia. The retracement coincided with news that the foreign ministers of Russia and Ukraine agreed to meet on Thursday and that Germany was holding a softer stance regarding the ban proposal.

Notwithstanding the intraday ease in oil, the fact that prices were still high exacerbated concerns about a slowdown in consumer spending due to people spending more at the gas pump. The weak price momentum in stocks was another cause for concern.

The underperformance of the S&P 500 consumer discretionary sector, which fell 4.8%, corroborated the consumer slowdown narrative. Likewise, the U.S. Global Jets ETF (JETS 16.91, -2.12, -11.1%) fell 11%, and Uber (UBER 28.57, -1.26, -4.2%) fell 4% despite raising its Q1 Adjusted EBITDA guidance range.

Like last week, the mega-caps were not a place to hide out, presumably because of cash-raising efforts amid expectations for further weakness. The Vanguard Mega Cap Growth ETF (MGK 209.69, -8.88) fell 4.1%, versus a 2.8% decline for the Invesco S&P 500 Equal Weight ETF (RSP 149.33, -4.25).

On the upside, the energy (+1.6%) and utilities (+1.3%) sectors each rose more than 1.0%.

The former was an obvious beneficiary of higher oil prices. The latter received support from NextEra Energy (NEE 84.18, +3.97, +5.0%), which was upgraded to Overweight from Sector Weight at KeyBanc Capital Markets on the view that the company will benefit from increased clean-energy initiatives.

Treasury yields also finished on a higher note, a byproduct of cash-raising efforts as demand for Treasuries decreased. The 2-yr yield increased five basis points to 1.54%, and the 10-yr yield increased three basis points to 1.75%. The U.S. Dollar Index rose 0.5% to 99.15.

Reviewing Monday's economic data:

Consumer credit increased by $6.8 billion in January (Briefing.com consensus $25.0 billion). The prior month saw an upward revision to $22.4 bln from $18.9 bln.
The key takeaway from the report is that there was a notable deceleration in credit expansion in January, as Omicron issues and rising interest rates came into play. Revolving credit saw its first contraction since April 2021.

Looking ahead, investors will receive the Trade Balance for January, the NFIB Small Business Optimism Index for February, and Wholesale Inventories for January on Tuesday.

Dow Jones Industrial Average -9.7% YTD
S&P 500 -11.9% YTD
Russell 2000 -13.1% YTD
Nasdaq Composite -18.0% YTD

Crude futures settle near $120 per barrel
07-Mar-22 15:30 ET
Dow -658.06 at 32956.74, Nasdaq -396.45 at 12916.99, S&P -107.84 at 4221.03

[BRIEFING.COM] The S&P 500 is down 2.5% and could close at its lowest level since last June.

One last look at the sectors shows consumer discretionary (-4.3%), financials (-3.1%), communication services (-3.0%), and materials (-3.0%) down between 3-4%, while the energy (+1.1%) and utilities (+1.1%) sectors both trade higher by 1.1%.

WTI crude futures settled higher by $4.00 (+3.5%) to $119.27/bbl.