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Wall Street closed sharply higher on Tuesday as crude oil prices fell below their recent record highs and lighter-then-expected inflation data. Market participants are eagerly waiting for the Fed’s FOMC meeting decision regarding the interest rate hike. Investors will also keenly watch the development on the geopolitical conflict between Russia and Ukraine. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 1.8% or 599.10 points to close at 33,544.34. Notably, 28 component of the 30-stock index ended in green while 2 finished in negative zone. The tech-heavy Nasdaq Composite finished at 12,948.62, jumping 2.9% or 367.40 points due to the strong performance of large-cap technology stocks.
Meanwhile, the S&P 500 climbed 2.1% to end at 4,262.45. Ten out of 11 broad sectors of the benchmark index closed in positive zone while one in red. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Consumer Staples Select Sector SPDR (XLP) and the Health Care Select Sector SPDR (XLV) advanced 3.4%, 3.4%, 2.2% and 2%, respectively. However, the Energy Select Sector SPDR (XLE) tumbled 3.7%.
The fear-gauge CBOE Volatility Index (VIX) was down 6.1% to 29.83. A total of 13.46 billion shares were traded on Tuesday, lower than the last 20-session average of 13.78 billion. Advancers outnumbered decliners on the NYSE by a 2.07-to-1 ratio. On Nasdaq, a 1.72-to-1 ratio favored advancing issues.
Oil Stocks Drop Tech Stocks Rise
Crude oil prices fell nearly 27% within a week time after skyrocketing to 14-year highs buoyed by the Russia-Ukraine war. On Mar 15, The U.S. benchmark – the West Texas Intermediate crude – closed the day at $96.44 pr barrel, down 6.4% from the previous day. The global benchmark – the Brent crude – closed the day at $99.91 pr barrel, down 6.5% from the previous day. Consequently, shares of oil giants like Chevron Corp. (CVX - Free Report) and Exxon Mobil Corp. (XOM - Free Report) tumbled 5.1% and 5.7%, respectively.
On the other hand, technology stocks have bounced back supported by chip makers. This happened amid the yield on the benchmark 10-Year U.S. Treasury Note rose 2.1 basis points to 2.16%, its 52-week high. Higher risk-free market interest rate is generally considered as detrimental to growth stocks like technology. Despite this, shares of NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) jumped 7.7% and 6.9%, respectively.
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. Higher commodity price will make inflation worse. At the same time, the war will disturb the already devastated global supply-chain system, which is the major source of current inflation. Prolonged supply-chain disruptions and higher interest rate may reduce U.S. economic growth. Higher inflation and lower growth may result in stagflation.
Economic Data
The Department of Labor reported that producer price index (PPI) for February increased 0.8% compared with the consensus estimate of 0.9%. January’s data was revised upward from 1% to 1.2%. However, year-over-year, the PPI increased more than 10%, highest in four decades. The core PPI increased 0.2% compared with the consensus estimate of 0.6%.
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Stock Market News for Mar 16, 2022
Wall Street closed sharply higher on Tuesday as crude oil prices fell below their recent record highs and lighter-then-expected inflation data. Market participants are eagerly waiting for the Fed’s FOMC meeting decision regarding the interest rate hike. Investors will also keenly watch the development on the geopolitical conflict between Russia and Ukraine. All three major stock indexes ended in positive territory.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) surged 1.8% or 599.10 points to close at 33,544.34. Notably, 28 component of the 30-stock index ended in green while 2 finished in negative zone. The tech-heavy Nasdaq Composite finished at 12,948.62, jumping 2.9% or 367.40 points due to the strong performance of large-cap technology stocks.
Meanwhile, the S&P 500 climbed 2.1% to end at 4,262.45. Ten out of 11 broad sectors of the benchmark index closed in positive zone while one in red. The Technology Select Sector SPDR (XLK), the Consumer Discretionary Select Sector SPDR (XLY), the Consumer Staples Select Sector SPDR (XLP) and the Health Care Select Sector SPDR (XLV) advanced 3.4%, 3.4%, 2.2% and 2%, respectively. However, the Energy Select Sector SPDR (XLE) tumbled 3.7%.
The fear-gauge CBOE Volatility Index (VIX) was down 6.1% to 29.83. A total of 13.46 billion shares were traded on Tuesday, lower than the last 20-session average of 13.78 billion. Advancers outnumbered decliners on the NYSE by a 2.07-to-1 ratio. On Nasdaq, a 1.72-to-1 ratio favored advancing issues.
Oil Stocks Drop Tech Stocks Rise
Crude oil prices fell nearly 27% within a week time after skyrocketing to 14-year highs buoyed by the Russia-Ukraine war. On Mar 15, The U.S. benchmark – the West Texas Intermediate crude – closed the day at $96.44 pr barrel, down 6.4% from the previous day. The global benchmark – the Brent crude – closed the day at $99.91 pr barrel, down 6.5% from the previous day. Consequently, shares of oil giants like Chevron Corp. (CVX - Free Report) and Exxon Mobil Corp. (XOM - Free Report) tumbled 5.1% and 5.7%, respectively.
On the other hand, technology stocks have bounced back supported by chip makers. This happened amid the yield on the benchmark 10-Year U.S. Treasury Note rose 2.1 basis points to 2.16%, its 52-week high. Higher risk-free market interest rate is generally considered as detrimental to growth stocks like technology. Despite this, shares of NVIDIA Corp. (NVDA - Free Report) and Advanced Micro Devices Inc. (AMD - Free Report) jumped 7.7% and 6.9%, respectively.
All four stocks mentioned above sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Fed FOMC in Focus
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. Higher commodity price will make inflation worse. At the same time, the war will disturb the already devastated global supply-chain system, which is the major source of current inflation. Prolonged supply-chain disruptions and higher interest rate may reduce U.S. economic growth. Higher inflation and lower growth may result in stagflation.
Economic Data
The Department of Labor reported that producer price index (PPI) for February increased 0.8% compared with the consensus estimate of 0.9%. January’s data was revised upward from 1% to 1.2%. However, year-over-year, the PPI increased more than 10%, highest in four decades. The core PPI increased 0.2% compared with the consensus estimate of 0.6%.