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Stock Market News for Mar 15, 2022

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Wall Street closed mostly lower on Monday to start the most crucial week of this year. Investors continued to monitor developments on the Russia-Ukraine war. Moreover, market participants are assessing the Fed’s decision regarding interest rate and monetary policies to be announced this week. The resurgence of new coronavirus cases in China has also dampened investors sentiment. The S&P 500 and the Nasdaq Composite ended in red while the Dow managed to gain marginally.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) was up marginally by 1.05 points to close at 32,945.24. In the intraday session, the blue-chip index was up by more than 400 points. Notably, 16 component of the 30-stock index ended in green while 14 finished in negative zone.

The tech-heavy Nasdaq Composite finished at 12,58122, sliding 2% or 262.59 points due to the weak performance of large-cap technology stocks. Technology stocks suffered as the yield on the 10-Year U.S. Treasury Note climbed to 2.139%, its highest since Jun 11, 2019. This was the tech-laden index’s lowest closing since Dec 14, 2020.

The major loser of Nasdaq Composite was Pinduoduo Inc. (PDD - Free Report) as the share price plunged 20.5%. Pinduoduo carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Meanwhile, the S&P 500 declined 0.7% to end at 4,173.11. Notably, the broad-market index’s short-term 5-0-day moving average crossed below the long-term 200-day moving average producing a death-cross for the index. This happened for the first time since March 2020.

Seven out of 11 broad sectors of the benchmark index closed in negative zone while four in green.  The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Communication Services Select Sector SPDR (XLC) and the Energy Select Sector SPDR (XLE) tumbled 1.9%, 1.7%, 1.2% and 3%, respectively. However, the Financials Select Sector SPDR (XLF) gained 1.3%.

The fear-gauge CBOE Volatility Index (VIX) was up 3.3% to 31.77. A total of 14.26 billion shares were traded on Tuesday, higher than the last 20-session average of 13.7 billion. Decliners outnumbered advancers on the NYSE by a 3.05-to-1 ratio. On Nasdaq, a 2.97-to-1 ratio favored declining issues.

Fed FOMC in Focus

The next round of two-day Fed FOMC will commence from Mar 15. In this crucial meeting the Fed will hike the benchmark interest rate for the first time in three years. Mounting inflation, which is currently at a 40-year high compelled the Fed to terminate its $120 billion monthly bond-buy grogram while raising interest rate in March.

Market participants are uncertain about the magnitude of rate hike. Just a month ago, most of the economists and financial experts believed that the first rate hike will be as high as of 50 basis points. However, Fed Chairman Jerome Powell said that a 25 basis point hike is expected in March. However, the central bank may raise the magnitude going forward this year, if it failed to contain inflation to its desired level.

Meanwhile, the ongoing war between Russia and Ukraine has complicated the situation. The geopolitical conflict has elevated several commodity prices to a record high level. Price of crude oil, nickel, palladium, copper and aluminum has soared. The prices of steel and coal are rising. In the food grain segment, wheat price has jumped.

Higher commodity price will make inflation worse. At the same time, will disturb the already devastated global supply-chain system, which is the major source of current inflation. Several economists and financial experts have warned that prolonged supply-chain disruptions and higher interest rate may reduce U.S. economic growth. Higher inflation and lower growth may result in stagflation.


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