Salem Radio Network News Tuesday, May 17, 2022

Business

Futures slide as Ukraine tensions weigh at start of crucial week

By Devik Jain and Bansari Mayur Kamdar

(Reuters) -Wall Street’s main indexes were set to fall on Monday after a bruising selloff last week, as the prospect of a Russian attack on Ukraine roiled global markets ahead of a Federal Reserve policy meeting later this week.

The highly anticipated meeting concludes on Wednesday and the market will pay close attention to how worried the Fed is over surging inflation and how aggressive the U.S. central bank will be in trying to contain it. [nL1N2U11YY]

Fed funds futures traders are fully pricing in a 25 basis point hike in March, in addition to three more rate increases by year-end.

The U.S. State Department announced on Sunday it was ordering diplomats’ family members to leave Ukraine, as U.S. President Joe Biden weighed options for boosting America’s military assets in Eastern Europe to counter a buildup of Russian troops.

The order was one of the clearest signs yet that American officials are bracing for an aggressive Russian move in the region.

A widely watched gauge of investor anxiety in U.S. markets – the CBOE Volatility index – climbed above 30 points to hit its highest level since early December.

“Ukraine clearly is a concern that’s weighing on the markets today,” said Darren Schuringa, chief executive officer of ASYMmetric ETFs in New York. “This will continue to weigh on the markets for the foreseeable future until there’s some type of resolution and more clarity as to what the outcome looks like.”

Stocks are off to a rough start in 2022, with the Nasdaq index now down 14.3% from its November closing peak as prospects of faster policy tightening steps spurred a rally in Treasury yields that dealt a sharp blow to Wall Street’s growth names.

Last week, the S&P 500 and the Nasdaq posted their worst weekly performance since the onset of the pandemic in March 2020. The benchmark index has fallen 8.8% from a record high hit on Jan 4.

At 08:15 a.m. ET, Dow e-minis were down 101 points, or 0.3%, S&P 500 e-minis were down 29.25 points, or 0.67%, and Nasdaq 100 e-minis were down 165.75 points, or 1.15%.

Technology companies Microsoft Corp, Apple Inc, International Business Machines Corp and Tesla Inc were down between 0.4% and 5.0% in premarket trading ahead of their results this week.

Growth heavyweights including Google-owner Alphabet Amazon.com, Netflix and Nvidia Corp also fell more than 1% each, while Citigroup, down 1.5%, led declines among major Wall Street lenders.

“For many tech companies, multiples and valuations are certainly high in a lot of instances and so if you don’t deliver the earnings to justify the valuation, there’s room for continued and further corrections,” Schuringa said.

Kohl’s Corp surged 33.9% after Reuters reported private equity firm Sycamore Partners is preparing to make a bid for the U.S. department store days after a consortium backed by activist investment firm Starboard Value proposed a buyout.

Pfizer Inc slid 3.7% after U.S. health regulators declined to approve the treatment for growth hormone deficiency in children that it developed with partner OPKO Health Inc.

Shares of OPKO dropped 10.8%.

Meanwhile, flash reading on Markit composite PMI for January is also due after market open.

(Reporting by Devik Jain and Bansari Mayur Kamdar in Bengaluru; Editing by Maju Samuel)

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