4.05pm: Equities close lower
US stocks ended with losses Thursday as talks between Russia and Ukraine failed, while CPI inflation reached a 40-year high.
At the closing, the Dow Jones Industrial Average was down by 0.3% or 112 points, at 33,174, while the Nasdaq Composite lost 1% at 13,130, as well as the S&P 500 shedding 0.4% at 4,260.
The Dow and S&P continued to trade in the correction territory, while the Nasdaq is in a bear market.
Investors are expecting a quarter-percentage-point rate hike in next week’s Federal Reserve meeting to control inflationary pressures.
Among gainers Thursday was Amazon.com Inc (NASDAQ:AMZN), as its shares jumped by 5.4% after announcing its 20:1 stock split.
12.05pm: Dow loses 400 points
US stocks had extended their losses around midday Thursday as investors’ risk appetite reversed again following unsuccessful talks on key issues to pause the fighting between Russia and Ukraine, while US economic data saw CPI inflation at a 40-year high, hinting at a potential rate hike by the Federal Reserve as soon as next Wednesday.
At noon, the Dow Jones Industrial Average had dropped by more than 400 points, or 1.3%, to 32,867, while the broader S&P 500 declined 1.4%, and the tech-heavy Nasdaq Composite shed almost 2%.
“With the lack of progress and the continued assault on Ukraine and its people, the sanctions from the West will keep coming which should ensure uncertainty remains high in the markets and any rallies vulnerable,” said Craig Erlam, senior market analyst, UK & EMEA, at OANDA.
He said that today's declines only partially offset yesterday's gains. “The worst is probably yet to come for Ukraine,” he added.
The higher-than-expected US CPI reading continued to sway the markets, further adding to the volatility on Wall Street.
The big number was in line with expectations, Erlam said, though “the likelihood is we're near the peak which could come next month.”
“That won't comfort those feeling the squeeze as a result of these widespread price increases, especially when faced with much higher energy prices, but the trajectory should start to look more promising after that,” he said.
It leaves little doubt that the Fed will raise rates next week and at upcoming meetings as the central bank hopes to get to grips with inflation having already ignored it for too long, Erlam noted.
Among the worst-performing stocks on Thursday were Apple Inc (NASDAQ:AAPL) and Meta Platforms, losing 3.5% and 3.2%, respectively. Tesla and Zoom Video also fell, dragging the Nasdaq Composite lower.
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10.05am: Markets falter at the open
US stocks plunged early on Thursday after economic data showed CPI inflation at a 40-year high - signaling potential interest rate hikes by the Federal Reserve as early as next week - while Russia-Ukraine ceasefire talks faltered, sending energy prices higher.
At the open, the Dow Jones Industrial Average shed over 300 points, or 1%, at 32,942, while the tech-laden Nasdaq Composite was down by 1.6%, and the S&P 500 lost 1.1%.
The decline comes after hopes for a de-escalation of Russian brutality in Ukraine faded as Moscow’s foreign minister denied requests for both a 24-hour ceasefire across war zones, and to open a humanitarian corridor in Mariupol.
On the economic front, February’s consumer price index (CPI) came in at 7.9%, with a gain of 0.8%, in contrast to the estimated 0.7% for the month.
“Unsurprisingly, energy prices provided a major contribution this month and are likely to receive a lot of attention. We have seen staggering, and perhaps now peaked, volatility in the crude oil market, acting as the main driver," said Caleb Thibodeau, senior associate, global capital markets for Validus Risk Management. "While only a 6.5% weighting in the CPI basket, energy was up over 25%, contributing close to 1.7% to the total 7.9% headline print."
The concentration of CPI gains in the goods and commodity categories is sure to hurt the spending power of lower-income consumers more acutely, at places like the grocery store, the gas pump, and the clothes shop, Thibodeau added.
“Political pressure and attention are higher than ever on reducing inflation, having made the State of the Union address and topping public polls as the greatest concern of the American public," he said. "It will take a formidable change in circumstances to steer the Fed away from a hike next Wednesday and at all subsequent FOMC meetings this year.”
On the corporate side, all eyes were on Amazon, with its shares rising over 4%, after the online shopping giant announced a 20:1 stock split as well as a $10 billion share buyback.
Over the past two years, Apple and Tesla have done the same, with 4:1 and 5:1 splits respectively in August 2020, while in July last year Nvidia did a 4:1 split.
6.30am: US stocks seen opening down
US stocks are expected to open lower, reversing some of Wednesday’s strong recovery gains, as the foreign ministers of Russia and Ukraine hold talks in Turkey as Moscow’s assault on its neighbor enters its third week.
Futures for the Dow Jones Industrial Average declined 0.87% in Thursday pre-market trading, while those for the broader S&P 500 index shed 0.83% and the tech-heavy Nasdaq fell 1.13%.
US stocks closed with significant gains Wednesday as the S&P 500 recorded its best day since June 2020, while commodity prices fell amid the ongoing war between Ukraine and Russia.
The Dow surged 2% to 33,286, while the S&P 500 added a significant 2.57% to 4,278, and the Nasdaq gained 3.59% to 23,256.
Ahead of talks in the southern Turkish city of Antalya today, Ukraine’s Foreign Minister Dmytro Kuleba said his expectations of the talks were low, while Ukraine’s foreign ministry said Kyiv was seeking an immediate end to the war against Ukraine by Russia.
“Markets rallied strongly as the oil price weakened and as sentiment received an overdue boost, following hopes of some progress in diplomatic talks between Russia and Ukraine,” commented Richard Hunter, head of markets at interactive investor.
“However, the sustainability of these relief rallies remains delicately poised. The conflict is ongoing and the road to resolution remains unclear, with any further military developments likely to unsettle sentiment immediately. With such an uncertain outlook, many possible scenarios remain on the table and, of course, any diplomatic developments will be watched with in a keen eye.”
Oil declined by the most in two years on Wednesday following reports that OPEC member the United Arab Emirates said it supported an increase in output after the market was sent into turmoil as a result of sanctions on Russia, the second-largest producer of oil.
“Indeed, the oil price dropped by as much as 17% overnight before staging a small recovery, following reports that the United Arab Emirates would support an increase of oil output via its membership of OPEC,” Hunter added. “Despite the drop, the oil price remains up by 47% in the year to date, mitigating but not eliminating the additional inflationary concerns which the spike has prompted.”