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Russia continues to attack Ukraine. Above, a resident carries his belongings from a badly damaged apartment building in Kharkiv on Sunday.
AFP via Getty Images
Stocks gave up gains earlier on Monday, as investors monitored ongoing talks between Russia and Ukraine ahead of the Federal Reserve’s decision on Wednesday. Technology stocks have been hit hard.
The
Point closed, while the
It decreased by 0.7%. The
It decreased by 2%. All three major indicators were in green earlier in the day.
“The day started with some optimism that the peace negotiations would make some progress,” wrote Michael Reinking, chief market strategist at the New York Stock Exchange. “However, the situation on the ground did not confirm this.”
A member of the Russian delegation to negotiate with Ukraine, Leonid Slutsky, said that “great progress” has been made in the peace talks between the two sides, According to reports.
This helped push the price of oil down. West Texas Intermediate crude fell 7% to about $101 a barrel. It is now down from a multi-year peak of $130 a week ago. The fear for the markets is that the ongoing conflict between Russia and Ukraine will prompt Western countries to punish Russian oil The United States has already imposed restrictions on Russian oil imports – which will significantly reduce global supply. This would only add to cumbersome swell that hit consumers.
The drop in oil prices initially helped stocks gain, but the market remains vulnerable to selling like the one seen on Monday afternoon, as macroeconomic uncertainty remains high. There may be chatter from Russia and Ukraine about the decision, but there is no concrete evidence so far Russian attacks in Ukraine continue.
Stocks across the board gave up gains “as optimism about diplomatic efforts to end the war in Ukraine fades,” wrote Edward Moya, chief market analyst at Oanda.
In addition, the Federal Reserve announced its interest rate decision this week. Markets expect the Fed to raise the benchmark lending rate by a quarter of a percentage point, but will listen to hear if the central bank indicates a more aggressive path to raising interest rates going forward. A bold Fed could mean slower economic growth.
Overall, “with a perfect storm of market drivers — inflation at all-time highs, severe geopolitical tensions, and an impending Fed decision — there is little sign that volatility will abate,” wrote Chris Larkin, managing director of trading. at ETrade.
Regarding the Federal Reserve specifically, “Wednesday’s expected rate hike comes at a difficult time, as we currently face a slowing economy…and rampant energy and food inflation,” wrote Danielle Dimartino Booth, CEO and chief strategist for Quill. Intelligence and former advisor to the Federal Reserve Chair in Dallas.
As for the tech-heavy Nasdaq, it underperformed the other indices for good reason. Since March 1, the 10-year Treasury yield has risen to 2.1% from 1.72%, as the note’s price has fallen. As the markets became a little more optimistic about the outcome of the Russo-Ukrainian war – and yet The Federal Reserve is almost certain to raise interest rates on Wednesday– Investors moved from safe government bonds.
Now, the 10-year yield is quite close to the pandemic-era high, and if it rises above that level, that could indicate a sustained rise in yield. This is bad for tech stocks because long-term bond yields make future earnings less valuable, and many tech companies are valued on large multi-year earnings.
The picture was mixed abroad, as it was pan-European
Jumped 1.2%, but Hong Kong
It fell 5%.
Here are six stocks on the move Monday:
After the sharp declines in Hong Kong, US stocks recorded in
Ali Baba
(Baba) stock fell 10 percent with
JD.com
(JD) decreased by 11%.
Tencent
(0700.HK) Hong Kong fell 9.8% on a Wall Street Journal report that the company faces a record fine for violating Chinese anti-money laundering regulations.
German Bank
AG
(DB) stock gained 8.6% after Berenberg upgraded the bank to Hold from the sale.
Nektar Therapeutics
(NKTR) NKTR stock fell 61% after the company announced that its experimental treatment bempegaldesleuk, which combines with
Bristol-Myers Squibb
‘s
Opdivo, Failed. This combination was expected to treat skin cancer.
Omnicom
OMC stock rose 4.4% even after Barclays was downgraded to “Equalweight” from “overweight”.
Write to Jack Denton at jack.denton@dowjones.com and Jacob Sonenshine at jacob.sonenshine@barrons.com
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