Shares were dragged lower for a second straight day after several U.S. officials issued warnings that Russia could attack Ukraine in the coming days.
Additionally, presentations from several members of the Federal Open Market Committee left investors eager for more details on the central bank’s impending tightening plans.
Among them was New York Fed President John Williams, who during a speech at a New Jersey City University event said “it would be appropriate to raise the target rate” in March, but did not specify by how much.
Also in the spotlight today was data from the National Association of Realtors, which showed existing home sales rose 6.7% month-over-month in January to a seasonally adjusted annual rate of 6.5 million units.
Sign up for Kiplinger’s FREE Investing Weekly e-newsletter for stock, ETF and mutual fund recommendations, plus other investing tips.
It’s the biggest sequential rise since July 2020, says Jennifer Lee, senior economist at BMO. And the gains were widespread across both categories of homes and regions in the United States. According to Lee, this likely indicates “the rush to get in before borrowing costs rise.” that higher rates are upon us.”
At the close, the Nasdaq Compound was down 1.2%% to 13,548, the S&P 500 Index was down 0.7% at 4,348 and the Dow Jones Industrial Average ended with a loss of 0.7% at 34,079 – although all three indices have completed their session lows.
As a reminder, the American stock market will be closed on Monday for Presidents’ Day.
Other news on the stock market today:
- Small cap Russell 2000 returned 0.9% to close at $2,009.
- U.S. Crude Futures lost nearly 0.8% to settle at $81.07 a barrel.
- Gold Futures Contracts slipped 0.1% to $1,899.80 an ounce.
- Bitcoin fell 2.2% to $40,032.78. (Bitcoin trades 24 hours a day; prices shown here are as of 4 p.m.)
- DraftKings (DKNG) plunged 21.6% after the sports betting company announced its earnings. In the fourth quarter, DKNG reported a lower-than-expected adjusted loss of 35 cents per share on higher-than-expected revenue of $473 million. But the company said it expects an adjusted EBITDA (earnings before interest, tax, depreciation and amortization) loss for fiscal year 2022 of $825 million to $925 million, higher than Wall Street expects. “DraftKings is facing intense pressure from new entrants into the mobile sports betting space from established brands like Caesars and BetMGM,” said Jonathan Dube, executive-in-residence at investment bank Progress Partners. “Investors will be aggressively watching new state rollouts. Recent rollouts in New York and Louisiana have pushed projected profitability from Q4 2022 to at least Q4 2023, according to the latest guidance, due to competitive intense and high marketing costs.”
- Roku (ROKU) was another loser after earnings, losing 22.3% after the streaming giant’s fourth quarter results. ROKU posted adjusted earnings of 17 cents per share for the three-month period, higher than the 9 cents per share analysts had expected. However, fourth-quarter revenue of $865.3 million was lower than the $894 million expected by Wall Street and the company offered current-quarter revenue guidance below analysts’ consensus forecast. “Following its relatively lackluster fourth quarter results, ROKU sees global supply chain disruptions and inflationary pressures still weighing on its 2022 active account growth and video monetization in certain ad categories,” Tuna said. CFRA Research analyst Amobi, who maintained a Hold rating on the stock. “Still, we believe ROKU remains relatively well positioned for an accelerated secular transition to streaming from traditional television, which bodes well for longer-term audience engagement.”
What Corporate America is really about
While the stock market may be worried about a possible Russian invasion of Ukraine, S&P 500 companies don’t seem to be.
“During each corporate earnings season, it is not uncommon for companies to comment on topics that impacted their earnings and revenue in a given quarter, or that could impact earnings and revenue in the quarters ahead,” said John Butters, senior earnings analyst at FactSet.
But in a search of all S&P 500 companies that had earnings conference calls between Dec. 15 and Feb. 17, “Ukraine” was mentioned in just 4% of those calls. “In contrast, 72% of S&P 500 companies cited ‘inflation’ on earnings calls during that same period,” Butters adds.
While companies often have options to fight higher inflation, so do investors. One potential way to hedge a portfolio against inflation risk is to use defensive stocks that pay dividends, such as healthcare stocks or real estate investment trusts (REITs).
Another is to consider consumer staples stocks, which tend to hold up during periods of higher prices. Read on to take a look at some of the best consumer staples stocks for 2022, many of which offer investors some level of defense against rising prices.