Stocks struggled out of the gate on Monday as investors, already trying to keep an eye out for any signs of the Federal Reserve’s next move, had to keep another eye on developments in Eastern Europe. .
Citing the continued buildup of Russian troops along the Ukrainian border, Secretary of State Antony Blinken today ordered the closure of the US Embassy in the capital Kyiv, sending personnel to Lviv. Several reports indicate that US intelligence thinks an attack could take place this week.
“Open hostilities could disrupt supply chains, and Western threats to impose financial sanctions could cause problems for banks that extended credit to Russian guarantors,” said Jason Pride and Michael Reynolds, CIO of management, respectively. Private and Vice President of Investment Strategy. , to the investment company Glenmede. The direct impact would be limited, however, with the pair noting that “Russia and Ukraine combined represent less than 3% of global GDP and 0.5% of global market capitalization.”
“The escalation of tensions between Russia and Ukraine comes at a time when the stock market is already vulnerable given inflation concerns and the potential for Federal Reserve tightening,” added George Ball, chairman. of investment firm Sanders Morris Harris. “If an armed conflict between Russia and Ukraine is somehow averted, a short-lived recovery is likely, but there are still too many worries on the horizon for any kind of movement. more sustainable upside in equities.”
The escalating dispute continued to push energy prices higher, with U.S. crude oil futures closing 2.5% at $95.46 a barrel – their highest close in more than seven years. And it also weighed on predominantly cyclical stocks; financials (-1.1%) and materials (-0.8%) were down, and energy (-2.3%) was the worst of the 11 sectors – despite the surge in oil.
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the Dow Jones Industrial Average (-0.5% to 34,566) and S&P500 (-0.4% to 4,401) ended slightly lower, while Nasdaq Compound closed with a marginal loss at 13,790.
After the Bell, Warren Buffett’s Berkshire Hathaway (BRK.B) has filed its latest 13F with the Securities and Exchange Commission. Among his many moves, Buffett added video game creator ActivisionBlizzard (ATVI) and untie Teva pharmaceutical (SUITS YOU). (You can check out the rest of Buffett’s recent buys and sells here.)
Other news on the stock market today:
- Small cap Russell 2000 was down 0.5% at 2020.
- Gold Futures Contracts tensions between Russia and Ukraine also increased, jumping 1.5% to $1,869.40 an ounce – their highest settlement since mid-November.
- Bitcoin lost some ground, slipping 0.3% to $42,198.55. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
- Cisco Systems (CSCO, -1.3%) hit the headlines after The Wall Street Journal reported Friday evening that the network technology company had made an offer of more than $20 billion to buy a specialist in cloud solutions Splunk (SPLK, +9.1%). However, the article also stated, according to people familiar with the matter, that the two companies are not currently in active talks. “We believe a potential purchase of Splunk makes a lot of sense for CSCO because it would add an incredibly powerful tool to its portfolio and could create billions in new cross-selling opportunities,” said CFRA analyst Keith Snyder (Buy). Research. “Although the unconfirmed price is expensive, we believe it is worth it given the potential synergies and rapid market growth.
- Callaway Golf (ELY) advanced 3.0% after Stephens analyst Daniel Imbro called the mid-cap stock a top pick. “We believe Callaway has a number of catalysts ahead of it, with an analyst day ahead in the second quarter, improved supply chain and improved Topgolf traffic in the first quarter,” it said. -he declares. Imbro is not alone in its bullish outlook. “We also expect tailwinds for Topgolf as consumers return to normal social activities as Covid-19 wanes,” CFRA Research analyst Zachary Warring (Buy) wrote Friday. “ELY plans to open 10 new Topgolf locations in 2022, with most coming in the second half of the year to bring the total number of locations to 80. We see value in stocks at these levels.”
How to Avoid Inflation
A Russian invasion of Ukraine could accelerate another major market concern: inflation.
“By pushing energy prices even higher, a Russian invasion would likely exacerbate inflation and increase pressure on the Fed to raise interest rates,” said Bill Adams, chief economist at the Fed. Comerica Bank. “From the Fed’s perspective, the inflationary effects of a Russian invasion and rising energy prices would likely outweigh the negative implications of the shock for global growth.”
While this could in turn swing the major indexes, some sectors would apparently be better off than others – including healthcare and consumer staples – thanks to their fundamental necessity and ability to pass on shocks. higher prices on consumers. Interestingly, you can find this dynamic at play among the top-rated dividend-paying stocks in the Dow Jones – a group of five companies yielding at least 2% that have also largely outperformed the market so far in 2022.
Security-seeking investors might very well find it in this five-stock mini portfolio, which combines top-notch fundamentals with inflation-resistant characteristics. Read on to find out which Dow dividend stocks topped the list.