News on the conflict in Eastern Europe was mixed at the end of the trading week, but markets surged as Wall Street waited for good news.
On Friday, Russian troops reportedly closed in on Kiev, the Ukrainian capital. Yet on the same day, the Kremlin said Russian President Vladimir Putin had agreed to send a delegation to the Belarusian capital of Minsk to negotiate with Ukraine.
Chinese President Xi Jinping also reportedly nodded towards a peaceful resolution, saying ‘China supports Russia and Ukraine to resolve issues through negotiations’ after a conversation with Putin, according to CCTV, owned by the state.
But part of Friday’s optimism could also come from shifting expectations for Federal Reserve action this year.
“Wall Street anticipates the central bank’s reluctance to get too aggressive with monetary policy tightening, so it could provide a cushion for a growth hit that will stem developments between Russia and Ukraine,” he said. said Edward Moya, senior market strategist at currency data provider OANDA.
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Back on the home front, the U.S. core personal consumption expenditure price index showed consumer spending rose 5.2% in January, according to the Commerce Department. It was slightly better than expectations for 5.1%.
“The strong consumption figures come at a time when many economists were worried about an economy weaning itself off government stimulus in the latter part of 2021, and whether the consumer would be able to pick up the slack. torch in 2022,” says Peter Essele, Head of Portfolio Management for Commonwealth Financial Network.
the Dow Jones Industrial Average – driven by the progress of Johnson & Johnson (JNJ, +5.0%), 3M (MMM, +4.7%) and Procter & Gamble (PG, +4.3%) – jumped 2.5% to 34,058, its best performance since a roughly 3% gain on Nov. 9, 2020. The S&P500 (+2.2% to 4,384) and Nasdaq Compound (+1.6% to 13,694) also posted strong gains, putting both indexes in positive territory for the week.
However, the market’s impressive comeback in recent days does not mean that the market is still off the hook.
Yesterday, the CBOE Volatility Index, or VIX, broke through the 30 mark amid the Russian invasion of Ukraine. “VIX above 30 indicates that investors are unusually worried about what’s next and are hedging their equity portfolios to protect against further declines,” say Michael Oyster and Steven Sears of the asset management company. Asset Options Solutions. “Market fears have eased somewhat, with the CBOE VIX below 30, but as it remains near the all-time high 10% level, the options market is barely signaling a green light.”
Other news on the stock market today:
- Small cap Russell 2000 jumped 2.3% to 2,040.
- U.S. crude oil futures fell 1.3% to end at $91.59 a barrel, but still ended the week up 1.5%.
Gold futures fell 2% to settle at $1,887.60 an ounce, taking its weekly decline to 0.6%.
- Bitcoin continued to rally to $40,000, rising 1.7% to $39,130.32. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
- Etsy (ETSY) climbed 16.2% after the online market reported fourth-quarter highs and lows. For the three-month period, ETSY earned $1.11 per share on $717 million. Although the company offered revenue and gross merchandise sales guidance for the current quarter below expectations, Chief Financial Officer Rachel Glaser said that was due to difficult pandemic-related year-on-year comparisons. ‘other. “ETSY is one of the few names to have survived the pandemic online bubble with initiatives to boost the main line of the main brand and subs,” says Needham analyst Anna Andreeva, who reiterated a note purchase on retail stock.
Foot locker (FL) did not participate in today’s general market rally, losing 29.8% after earnings. In its fiscal third quarter, the sportswear retailer reported adjusted earnings of $1.67 per share on $2.34 billion in revenue, higher than $1.44 per share and $2.33 billion in dollars expected by analysts. However, FL also warned that revenue would likely be down 4% to 6% and same store sales would contract 8% to 10% in fiscal 2022. This is in part because the company sells fewer products from Nike (NKE). “In the fourth quarter of 2021, Nike accounted for 65% of vendor spend, which FL expects to reduce to 55% going forward,” said CFRA Research (Hold) analyst Zachary Warring. “We don’t like FL’s positioning as businesses shift to direct-to-consumer and they continue to have more exposure to malls, but see limited downside as FL is currently trading at 6.0x 2023 EPS and a clean balance sheet.
Where can opportunists put their money to work?
In times of market crisis, some people look for protection, while others look for opportunity.
Rhys Williams – chief strategist at Spouting Rock Asset Management and a former journalist in the Moscow bureau of the Sunday Times – has a gloomy outlook on the geopolitical situation:
“Putin seems to have made up his mind, and it looks like he’s opted for regime change,” Williams said, adding that in the medium term, he’s unsure how business will return to normal.
But there are market implications for investors looking to buy on this decline.
“I think Big Tech will get a bid after a significant correction because they have a lot of cash and basic consumer qualities. They also aren’t losing a lot of business in Russia and Ukraine relative to overall revenue,” he said. These 12 stocks represent some of our best ideas in the broader sector, although specific industries such as cybersecurity are becoming a hot pick.
Rhys also likes stocks with higher dividend yields, “because that may cap interest rates for a while.”
You can start with this pack of nine stocks paying out 5% or more in annual income – but more importantly, they weren’t selected just for their big returns. These picks typically feature conservative payout ratios, stronger balance sheets, and business models that generate predictable cash flow, which means their dividends aren’t just generous… they’re sustainable over the long term.