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Stock Market News for Mar 31, 2022

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U.S. stock markets closed lower on Wednesday after a choppy trading session. Market participants continued to monitor developments regarding the geopolitical conflict between Russia and Ukraine.  Moreover, investors remained concerned regarding the potential inversion of the U.S. sovereign bond yield curve. All three major stock indexes ended in negative territory.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) fell 0.2% to close at 35,228.81. Notably, 14 component of the 30-stock index ended in green while 15 finished in positive zone and 15 ended in red and one remained unchanged. The tech-heavy Nasdaq Composite finished at 14,442.27, sliding 1.2% or 177.36 points due to the weak performance of large-cap technology stocks.

Meanwhile, the S&P 500 dropped 0.6% to end at 4,602.45. Seven out of 11 broad sectors of the benchmark index closed in negative zone while four in green. The Consumer Discretionary Select Sector SPDR (XLY) and the Technology Select Sector SPDR (XLK) tanked 1.5% and 1.3%, respectively. On the other hand, the Energy Select Sector SPDR (XLE) advanced 1.2%.

The fear-gauge CBOE Volatility Index (VIX) was up 2.3% to 19.33. A total of 11.69 billion shares were traded Wednesday, lower than the last 20-session average of 13.93 billion. Decliners outnumbered advancers on the NYSE by a 1.24-to-1 ratio. On Nasdaq, a 1.98-to-1 ratio favored declining issues.

Russia-Ukraine conflict Continues

The war between Russia and Ukraine continues despite several round of peace talk. On Mar 29, the first negotiations meeting in two weeks between Russia and Ukraine held in Turkey. In the meeting\, Russia said that it will significantly reduce its military operations around the Ukraine’s capital of Kyiv and the norther city of Chernihiv. Instead, Russian troops will concentrate more on the eastern part of Ukraine. On the other hand, Ukraine has decided to follow the path of neutrality and will not join the U.S.-led alliance of NATO.

However, on Mar 30, Russian troops continued shelling around Kyiv and other cities neighboring the capital of Ukraine.  Consequently, the price of the U.S. benchmark – West Texas Intermediate – crude future for May delivery rose 3.4% to settle at $107.82 per barrel. The WTI crude price fell below $100 per barrel during intraday trading on Mar 29.

Shares of oil behemoths like Occidental Petroleum Corp. (OXY - Free Report) and Exxon Mobil Corp. (XOM - Free Report) gained 1.2% and 1.7%, respectively. Occidental Petroleum sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Concern on Government Bond Yield Curve

Wall Street ended session on Mar 28 with a partial inversion of the term structure of the sovereign bonds. The yield spread between the 5-Year and 30-Year U.S. Treasury Notes inverted for the first time since March 2006.

Inversion in government yield curve is considered as a sign of an upcoming economic recession. However, a more visible sign of an upcoming recession is the yield inversion of the 2-Year and 10-Year U.S. Treasury Note. Although, that yield spread remained positive, it has significantly narrowed during this week.

Economic Data

The third and the final estimate of the GDP  have shown that in fourth-quarter 2021, the U.S.  economy grew at 6.9%, marginally lower than the second estimate of 7%.

Automatic Data Processing Inc. (ADP - Free Report) National Employment Report has revealed that the private sectors have added 455,000 jobs in March. February’s data was revised upward to 486,000 from 475,000 reported earlier.

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