What you need to know…

The S&P 500 Index ($SPX) (SPY) on Thursday closed down -2.12%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -1.78%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -2.96%. 

U.S. stock indexes on Thursday moved lower the entire day, with the Dow Jones Industrials falling to a 2-1/2 week low.  Stock indexes Thursday were under pressure on concerns about escalating Russia-Ukraine tensions after the U.S. and Britain said that Russia continues to bolster its troop presence along Ukraine’s border.  President Biden also warned Thursday that the probability of Russia invading Ukraine is “very high.”  Weaker-than-expected U.S. economic data Thursday also weighed on stocks after weekly U.S. jobless claims unexpectedly rose and U.S. Jan housing starts fell more than expected. 

Stocks extended their losses Thursday afternoon on hawkish comments from St. Louis Fed President Bullard, who reiterated that he favors 100 bp of interest rate increases from the Fed by July 1 and favors starting reduction of the Fed's balance-sheet in Q2.

Thursday’s U.S. economic data was mostly bearish for stocks.  Weekly initial unemployment claims unexpectedly rose +23,000 to 248,000, showing a weaker labor market than expectations of a decline to 218,000. Also, the Feb Philadelphia Fed business outlook survey fell -7.2 to 16.0, weaker than expectations of 20.0. In addition, Jan housing starts fell -4.1% m/m to 1.638 million, weaker than expectations of -0.4% to 1.695 million. On the positive side, Jan building permits, a proxy for future construction, unexpectedly rose +0.7% m/m to a 15-1/2 year high of 1.899 million, stronger than expectations of a -7.2% m/m decline to 1.750 million.

An easing of the pandemic is supportive for stocks after the 7-day average of new U.S. Covid infections fell to a 2-month low Wednesday of 128,9322, down from the mid-January record high of 802,223.

Today’s stock movers…

Technology stocks sold off Thursday and weighed on the overall market.  Marvell Technology (MRVL), Intuit (INTU), and Dexcom (DXCM) closed down more than -6%.  NXP Semiconductors (NXPI), Tesla (TSLA), and Microchip Technology (MCHP) closed down more than -5%, and Adobe (ADBE), Advanced Micro Devices (AMD), Meta Platforms (FB), and Oracle (ORCL) closed down more than -4%.

Abermarle (ALB) closed down more than -19% Thursday to lead losers in the S&P 500 after reporting Q4 gross profit of $236.6 million, weaker than the consensus of $263.2 million.

Nvidia (NVDA) closed down more than -7% Thursday after it reported Q4 operating expenses of $1.45 billion, above the consensus of $1.43 billion, and reported Q4 adjusted gross margin of 67.0%, below the consensus of 67.1%.

LKQ (LKQ) closed down more than -13% Thursday after reporting Q4 gross margins of 39.9%, weaker than the consensus of 40.3%.

Newmont Mining (NEM) closed up more than +5% Thursday to lead gainers in the S&P 500 after ramped-up Russia-Ukraine tensions pushed gold prices up to an 8-1/4 month high.

Walmart (WMT) closed up more than +4% Thursday to lead gainers in the Dow Jones Industrial after reporting Q4 adjusted EPS of $1.53, better than the consensus of $1.51, and said it plans a $10 billion share buyback program in 2023.

Kraft Heinz (KHC) closed up more than +3% Thursday to lead gainers in the Nasdaq 100 after it reported Q4adusted Ebitda of $1.61 billion, above the consensus of $1.49 billion, and forecast 2022 adjusted Ebitda of $5.8 billion-$6.0 billion, the midpoint stronger than the consensus of $5,88 billion. 

Across the markets…

March 10-year T-notes (ZNH22) on Thursday closed up +19.5 ticks, and the 10-year T-note yield fell by -7.1 bp to 1.967%.  Heightened Russia-Ukraine tensions Thursday weighed on stocks and boosted the safe-haven demand for T-notes.  T-note prices also rallied after Russia expelled the deputy U.S. Ambassador from Moscow and, as President Biden said that the probability of a Russian invasion of Ukraine is “very high.” In addition, Thursday’s mostly disappointing U.S. economic data gave T-notes a boost as well as a decline in inflation expectations after the 10-year breakeven inflation rate fell to a 1-week low of 2.422%.