Market seeks stability after bounce

  • Energy sector leads market as oil prices soar
  • Jobs report beats, Powell signals quarter-point hike
  • This week: Russia–Ukraine, inflation (CPI), Fed watch

Last week saw markets in classic “disruption” mode: Stocks were down, while investors sought protection from geopolitical uncertainty in US Treasuries, the dollar, and gold.

Overall, the stock market’s losses were relatively modest considering the S&P 500 (SPX) enjoyed only one up day, as traders appeared to look past mostly strong economic data and focus on the uncertainty of the war in Ukraine:

Chart 1: S&P 500 (SPX), 1/26/22–3/4/22. S&P 500 (SPX) price chart. The slump after the bounce.

Source: Power E*TRADE. (For illustrative purposes. Not a recommendation.)

The headline: Stocks slip as Russian invasion dominates market conversation.

The fine print: Most of the week’s economic data and market news—including a stronger-than-expected jobs report and Fed chief Jerome Powell’s testimony before Congress—took a back seat to developments in Ukraine. But amid soaring energy prices, OPEC and its allies (one of which is Russia) didn’t even mention the invasion when the exporting cartel announced last Wednesday it wouldn’t increase crude oil output next month beyond the 400,000 barrels/day it had already agreed upon.1

The move: Wheat (see “Commodity crunch,” below).

The number: 0.25%. Jerome Powell confirmed the Fed is still planning to raise interest rates by this amount next week, and was prepared to be more aggressive if inflation doesn’t ease.2

The scorecard: It was red across the board last week, but the Nasdaq 100 (NDX) tech index took the biggest hit:

US stock index performance table for week ending 3/4/22. S&P 500 (SPX), Nasdaq 100 (NDX), Russell 2000 (RUT), Dow Jones Industrial Average (DJIA).

Source (data): Power E*TRADE. (For illustrative purposes. Not a recommendation.)

Sector roundup: The strongest S&P 500 sectors last week were energy (+9.2%), utilities (+4.8%), and real estate (+1.7%). The weakest sectors were financials (-4.9%), information technology (-3%), and communication services (-2.7%).

Highlight reel: Meritor (MTOR) +44% to $35.47 on Monday, Nordstrom (JWN) +38% to $26.93 on Wednesday. On the downside, GoodRx (GDRX) -39% to $16.74, Ambarella (AMBA) -31% to $95.98 on Tuesday.

Futures action: April WTI crude oil (CLJ2) tagged $116.57/barrel last Thursday—the market’s highest level since 2008—before ending the week at $115.68. Gold extended its biggest upswing in nearly a year, with April gold (GCJ2) closing Friday at a 16-month high around $1,967/ounce. Biggest up moves: May wheat (ZWK2) +40.6%, May hard red wheat (KWK2) +36.3%. Biggest down moves: March Russian ruble (R6H2) -27.7%, May coffee (KCK2) -6%.

Coming this week

While the markets will likely continue to focus on Ukraine (as well as next week’s Fed meeting), the latest Consumer Price Index (CPI) reading highlights this week’s economic calendar:

Today: Consumer Credit Change
Tuesday: NFIB Business Optimism Index, Balance of Trade, Wholesale Inventories
Wednesday: Job Openings and Labor Turnover Survey (JOLTS)
Thursday: Consumer Price Index (CPI)
Friday: Michigan Consumer Sentiment (preliminary)

This week’s earnings include:

Today: Eagle Pharmaceuticals (EGRX), Ciena (CIEN), Squarespace (SQSP)
Tuesday: Dick's Sporting Goods (DKS), Bumble (BMBL), Casey's General Stores (CASY), Stitch Fix (SFIX)
Wednesday: Gatos Silver (GATO), United Natural Foods (UNFI), Thor Industries (THO), Campbell Soup (CPB), Fossil Group (FOSL)
Thursday: (JD), (LZ), Limoneira (LMNR), Ulta Beauty (ULTA), Rivian Automotive (RIVN)
Friday: Futu (FUTU)

Check the Active Trader Commentary each morning for an updated list of earnings announcements, IPOs, economic reports, and other market events.

Commodity crunch

Even though five of the 11 S&P 500 sectors had positive returns last week, not one of the 61 industries within them enjoyed double-digit percentage gains.

The picture was much different in the commodity space—and it wasn’t solely an oil story. Overall, nine commodities had double-digit gains last week—five energy markets (WTI crude oil, Brent crude oil, gasoline, natural gas, and heating oil), four grain markets (wheat, hard red wheat, spring wheat, and corn), and palladium. Three others (sugar, copper and lumber) just missed the 10% threshold.

While the 26% rally in US crude oil was the market’s largest weekly gain since May 2020 (when it was rebounding from the COVID price collapse), it paled in comparison to the jump in wheat prices. May wheat futures (ZWK2) soared more than 40% to $12.09/bushel—the market’s biggest one-week rally since 2008—as Russia’s invasion of Ukraine threatened to disrupt supplies from both countries, both of which are major wheat exporters.3


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1 The Wall Street Journal. Oil Is Thicker Than Blood for OPEC. 3/2/22.
2 Fed's Powell says still appropriate to raise interest rates by 25 bps in March. 3/2/22.
3 Wheat Sustains Highest Price Since 2008 on Fears of Grain Flows. 3/2/22.

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