Geopolitical Turmoil Fuels Fear-Filled Week on Wall Street

Russia invaded Ukraine on Thursday, Feb. 24

Deputy Editor
Feb 25, 2022 at 3:23 PM
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The holiday-shortened week was rife with geopolitical tension, as Russia's pending invasion of Ukraine put pressure on Wall Street and markets around the world. There was speculation that Russia's president Vladimir Putin was merely posturing. Still, U.S. President Joe Biden responded by imposing strict sanctions, and the Dow, Nasdaq, and S&P 500 closed substantially lower on Tuesday. The White House ramped things up on Wednesday, extending sanctions to the company behind the Nord Stream 2 natural gas pipeline, and all three benchmarks closed lower once again, with the S&P 500 burrowing deeper into correction territory.

By Thursday, any doubt of a full-scale invasion was swiftly eviscerated as Russia officially launched an attack, though all three major indexes snapped their losing streaks in a stunning afternoon comeback. At this point on Friday, the market is building on yesterday's gains, and the S&P 500 and Nasdaq are both headed for weekly wins, though the Dow is still on track for its third-straight weekly loss

Analysts Weigh In on Oil Sector's Future

Analysts had their hands full balancing the overseas crisis with happenings back at home, but seemed to land on the optimistic side of the coin when considering the future of black gold. RBC upgraded oil and gas giant BP (BP), noting the potential for substantial free cash flow and limited impact from the invasion despite its dealings in Russia. Marathon Oil (MRO) also nabbed a bull note on the heels of Russia's attack, with Piper Sandler upgrading the equity and noting the commodity has some life left in it.

Elsewhere, DraftKings (DKNG) earned a slew of bear notes following a lackluster 2022 outlook; Quest Diagnostics (DGX) was downgraded by UBS due to the uncertain future path of Covid-19 and its potential impact on the company's 2023 earnings target; and eBay (EBAY) issued a weaker-than-expected current-quarter revenue forecast, leading at least nine analysts to slash their price targets.

Earnings Season Begins to Cool Down

Earnings season is winding down, but there were still plenty of big names announcing their results. Lowe's (LOW), for instance, saw its shares topple a key trendline after a stellar report. Chinese e-commerce giant Alibaba (BABA), meanwhile, sank to multi-year lows after its trip to the earnings confessional. Options traders had to get in on the action, with volume running wild for both Foot Locker (FL) and Nikola (NKLA) after their respective reports.

Reopening plays were in focus, as well. Live Nation Entertainment (LYV) had a mixed fourth-quarter report, but brushed off the news even in the face of pressure from the broad-market selloff. On the other hand, movie theater operator Cinemark (CNK) shrugged off a surprise profit and earnings beat, which was the result of customers returning to theaters as pandemic fears waned.

March to Start with Jobs, Inflation Data

There's plenty for investors to keep an eye on at the start of the new month. Jobs data and inflation updates will take center stage, as Wall Street assesses how the winter's omicron variant wave impacted the economic front. As far as earnings go, AMC Entertainment (AMC), AutoZone (AZO), Best Buy (BBY), Dollar Tree (DLTR), Kroger (KR), Novavax (NVAX), Salesforce.com (CRM), Target (TGT), and Zoom Video (ZM), are just a few names slated to report. Meanwhile, the Nasdaq just experienced a death cross, so be sure to check out Schaeffer's Senior Quantitative Analyst Rocky White's breakdown of what that means for the benchmark, historically.

 

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