4.06pm: Stocks falter at the closing
US markets ended mixed Monday as investors await the Fed decision on a rate hike later this week amid hopes of de-escalation between Ukraine and Russia.
At the closing, the Dow Jones Industrial Average was flat at 32,945, while the Nasdaq Composite dropped 2% at 12,581, and the S&P 500 lost 0.7% at 4,173.
“Higher commodity prices could fall back to more reasonable levels though in the event of a ceasefire which would certainly ease the significant headwinds currently facing the global economy this year,” commented Craig Erlam, senior market analyst, UK & EMEA, OANDA.
Stocks suffered a gradual decline during the day amid the new COVID-19 lockdown in Chinese cities, fueling concerns about increased pressures on the supply chain.
Qualcomm was one of the worst-performing companies Monday, losing 7.3%, while Intel dropped 3.1%, and Salesforce lost 2.4%.
12.05pm: Markets mixed as tech stocks fall
US stocks continued to be mixed midday as investors await a monitory policy decision from the Federal Reserve later this week, while eyeing talks on a possible truce in the Russia and Ukraine conflict.
At noon, the Dow Jones Industrial Average was up 300 points, or 0.9%, at 33,238, while the S&P 500 added 0.3%. Oil prices fell sharply, alongside other commodity prices, temporarily easing inflationary pressures as investors nervously eye the Fed rate decision due this Wednesday.
But the Nasdaq Composite fell 0.9% as tech companies suffered due to news of a new coronavirus (COVID-19) lockdown in a Chinese city.
“US markets have taken their cues from the positive session in Europe, opening modestly higher, however, the weakness seen in Chinese markets has seen the tech sector lag with the likes of Alibaba, Tencent, and JD.com sliding back sharply,” commented Michael Hewson, chief market analyst at CMC Markets UK.
“Apple shares have also come under pressure due to the lockdown in Shenzhen [China], and the suspension of all non-essential business activity, as investors absorb the fact that Foxconn, which is one of Apple’s key suppliers, is located there, and is set to remain closed until further notice,” he added.
10.00am: Equities mixed ahead of Fed's decision
US stocks were mixed at the open on Monday ahead of the Federal Reserve’s monetary policy decision meeting this week to be made in the face of soaring inflation and the Ukraine-Russia war.
At the open, the Dow Jones Industrial Average jumped 160 points, or 0.5% at 33,107, while the broader S&P 500 added 0.3%, but the tech-laden Nasdaq Composite shed 0.4%
“The Fed will likely prove, just as the ECB [European Central Bank] did, somewhat more hawkish than just the expected 25 bps hike, with perhaps one or more dissents for 50 bps and rhetoric about 50 bps being prominently on the table next meeting,” said Nikko Asset Management Chief Global Strategist, John Vail.
He noted that fortunately, oil is off its high, but said anything could happen and its path ahead will be important to the Fed.
“The Fed is also cognizant of the 1960s when political considerations (Vietnam war in that case) were used to pressure the Fed to remain dovish but unfortunately eventually led to sustained high inflation,” Vail noted.
On the geopolitical front, Ukraine and Russia resumed diplomatic talks Monday, as Kyiv officials continued to push for a ceasefire agreement and an immediate withdrawal of Russian troops.
Among stocks moving, shares of Apple Inc (NASDAQ:AAPL) were down by 1.5% following reports on coronavirus (COVID-19) outbreak in China, disrupting the company’s manufacturing.
7.30am: US stocks seen opening up
US stocks are expected to open higher as Russia and Ukraine resume virtual talks aimed at ending the conflict that has continued to escalate.
Futures for the Dow Jones Industrial Average rose 0.28% in Monday pre-market trading, while those for the broader S&P 500 index gained 0.78% and the tech-heavy Nasdaq added 0.45%.
The diplomatic efforts to end the war follow an escalation in the conflict over the week as Russia attacked a Ukraine base close the country's border with Poland, killing 35 people and wounding 134, according to a Ukrainian official. Russia is also reported to have asked China to provide it with military equipment.
“Stock index futures rose as trading got underway on Monday, while gold and crude oil slipped, as once again, there was hope that the Ukraine conflict could end after officials from both sides gave their most upbeat assessments yet on Sunday about the progress in peace talks,” commented Fawad Razaqzada, market analyst at ThinkMarkets. "Apparently, there could be positive results within days."
Stocks closed with losses on Friday after the markets declined in the final hour of the trading session as investors remained cautious due to the ongoing Russia-Ukraine war.
The Dow lost 0.69% to 32,944, while the Nasdaq plunged 2.18% to 12,844 and the S&P 500 shed 1.3% to 4,204.
“You can understand why the markets have reacted positively to the headlines given the fact that developments in Ukraine have been the primary driver of risk appetite," Razaqzada added. "But so far, every bit of optimism has led to pessimism and disappointment, with Russian forces continuing their military operations regardless. Will this prove to be another such scenario?"
Also this week, the US Federal Reserve is expected to hike interest rates by 25 basis points when the Federal Open Market Committee wraps up its two-day meeting on Wednesday.
“Will the Fed surprise the market with a 50 basis point hike? I doubt it,” Razaqzada said.
“Although inflation has continued to soar, a 25 basis point hike is a good way, the Fed would feel, to get the hiking cycle started without scaring the markets.”