US stocks were mixed on Monday as investors monitored the potential for more sanctions against Russia amid ongoing concerns about inflation and global economic growth.
The S&P 500 traded flat, while the Dow Jones tanked. The Nasdaq Composite was up around 0.4% just after the market opened as tech stocks outperformed. Twitter Actions (TWTR) shot up more than 20% after Tesla (TSLACEO Elon Musk revealed that he now owns a roughly 9.2% stake in the social media company.
Investors around the world eyed the European Union’s upcoming punitive measures against Russia as the month-long war in Ukraine escalated further. The EU responded on Monday to apparent war crimes in Ukraine, as Russian forces now allegedly killed civilians and targeted civilian infrastructure in major cities, with the bloc saying in a serious statement, “as a matter of urgency, work on new sanctions against Russia”. Some important European officials, including Germany’s defense minister said he would support a ban on Russian natural gas – a move previously excluded from sanctions as Russia supplies about 40% of Europe’s gas power.
US crude oil prices rose on Monday morning and appeared to rise for the first time in three sessions. Brent crude, the international standard, also won.
JPMorgan (JPM) CEO Jamie Dimon also drew attention to the war in Ukraine as one of the three key risks he saw to the economic outlook, according to his Widely read annual shareholder letter released Monday. The other included “the dramatic stimulus-driven recovery from the COVID-19 pandemic” as well as “the likely need for rapid rate hikes and the required reversal of QE.” [quantitative easing]from the Federal Reserve, Dimon said.
“We don’t know what its ultimate outcome will be, but the hostilities in Ukraine and the sanctions on Russia are already having a substantial economic impact. They have disrupted world oil, commodity and agricultural markets,” Dimon said.. “Our economists currently think that the euro zone, highly dependent on Russia for oil and gas, will see GDP growth of about 2% in 2022, rather than the lofty 4.5% pace we expected just six years ago.” On the contrary, they expect the US economy to advance approximately 2.5% against a previously estimated 3%”.
Concerns about the resilience of the US economy in the face of a geopolitical crisis and still high inflation have further inflamed. as a closely watched portion of the inverted Treasury yield curve – a move that has previously preceded recessions. As of Monday morning, the benchmark 10-year note yield remained below that of the short-term 2-year note. Such a phenomenon has occurred before each of the last eight recessions since 1969.
“Investors have been especially concerned about the prospect of a yield curve inversion signaling an impending recession,” Goldman Sachs strategist David Kostin wrote in a note. “Our rate strategists recently raised their forecasts and now expect 2Y UST and 10Y UST yields to end 2022 at 2.9% and 2.7%, respectively, for a 20bp [basis point] investment”.
“However, our strategists note that the nominal curve tends to invert more easily in high-inflation environments, meaning a deeper nominal curve inversion than in recent cycles would be needed to produce a comparable recession signal,” he added. . “Asset indicators imply a 38% chance of a recession within 24 months.”
9:42 a.m. ET: Hertz announces plans to buy electric vehicles from Tesla rival Polestar
hertz (HTZ) said Monday planned to buy up to 65,000 electric vehicles from Polestar, an automotive start-up that competes with incumbents like Tesla in the electric vehicle market.
The car rental company said it would make these purchases over five years, with availability beginning this spring in Europe and later this year in North America and Australia.
“For Hertz, the partnership is part of the company’s ongoing commitment to pioneer electrification, shared mobility and a digital-first customer experience.” according to the company’s press release. “In addition to making the fleet available to its business and leisure customers, Hertz is extending EVs to rideshare drivers as a way to further accelerate electrification.”
In October 2021, Hertz previously announced that it has ordered 100,000 Tesla Model 3 vehicles for delivery by the end of 2022.
9:31 a.m. ET: S&P 500, Nasdaq opens slightly higher
This is where the markets were trading right after the opening bell:
S&P 500 (^GSPC): -2.68 (-0.06%) to 4,543.18
down (^ DJI): -80.73 (-0.23%) to 34,737.54
Nasdaq (^IXIC): +42.83 (+0.3%) to 14,304.75
Raw (CL=F): +$3.35 (+3.37%) at $102.62 a barrel
Gold (CG=F): +$10.80 (+0.56%) at $1,934.50 per ounce
10-year Treasury (^TNX): +3.3 bps for 2.393% throughput
9:04 a.m. ET: First-quarter drop in stocks was smaller than previous quarterly declines: BofA
With the second quarter of 2022 already underway, Bank of America took a deeper look at the biggest quarterly decline in the first quarter since the first three months of 2020. The company found that despite the volatility, stocks still outperformed. in many cases in the past. .
“Despite high levels of uncertainty, equities rallied in March (S&P 500 +3.7% total return) and closed Q1 just 4.6% (down as much as 12.3%)”, Savita Subramanian, an equity and quantification strategist at Bank of America, wrote in a note Monday. “But a 4.6% drop in a quarter is less than the historical average drop of 6.5% in down quarters since 1936. Equities also outperformed both long-term Treasuries (-10, 2%) and corporate bonds (-7.7%) amid higher rates (10-year yield +83bp).”
Subramanian also noted that the performance of the sector during the first quarter, with the energy sector posting its best quarter since 1970, favored names that have historically outperformed during periods of stagflation or times of high inflation and low growth.
“The top three sectors YTD (Energy +38%, Utilities +4% and Commodities -2%) were the best performers during periods of stagflation in the past, marked by below-average GDP and a rising inflation…while the bottom three (Comm. Svcs. -12%, Cons. Disc. -9% and Tech -9%) have been the worst performers during stagflation,” he added.
Monday at 7:48 a.m. ET: Stock futures have an upside advantage
Here is where the markets were trading on Monday morning:
S&P 500 Futures (EN=F): +5.25 points (+0.12%) at 4,544.5
dow futures (YM=F): -3 points (-0.01%) at 34,715.00
Nasdaq futures (NQ = F): +49.25 points (+0.32%) at 14,911.00
Raw (CL=F): +$0.75 (+0.76%) at $100.02 a barrel
Gold (CG=F): +$10.10 (+0.53%) at $1,933.80 per ounce
10-year Treasury (^TNX): +2 bp to yield 2.395%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.