😰 Wall Street’s Fear Gauge Near Its Highest Level Of The Year

Friday,
February 25, 2022

Market recap

Dow Jones

33,223.83

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Top Story

Investor React to Russian Invasion of Ukraine, Wall Street’s Fear Gauge Near Its Highest Level Of The Year

• US stocks were volatile Thursday after Russia’s invasion of Ukraine. Political statements, economic data points, natural disasters, or global unrest can often have some sort of effect on the stock market because they affect market sentiment, which plays an important role in investment valuations. Here’s how market sentiment is used as a tool for market analysis.

• Heightened volatility is part of investing sometimes. Understanding the causes can help you be a more prepared investor. Here’s a closer look at what volatility exactly is, what causes volatility in stocks, and how to respond.

• Despite the volatility early in the day, all three major indices rebounded from session lows to finish in the green. The Dow engineered an over 800 point turnaround in a stunning afternoon development. Investors are responding to both geopolitical turmoil and its potential impact on inflation, as well as how the Fed might respond.

• Initial jobless claims hit a 52-year low. The Department of Labor’s number came in at 232,000 — representing a decline of 17,000 from the previous week. It means fewer Americans are now collecting unemployment than at any point since 1970.

What to Be on the Lookout for Today

• The January PCE or Personal Consumption Expenditures index is due, which is the Fed’s preferred inflation gauge. It rose by 5.8% year-over-year in December — the highest such rate since 1982. November’s index checked in at a 5.7% increase.

• Core inflation will also be reported for January, which strips out food and energy costs. December’s core inflation rose by 0.5% from November.

• Foot Locker (FL) will report results from the fourth-quarter of 2021. Analysts are expecting $2.35 billion in revenue, which would represent a 7.3% increase from the same quarter in 2020. Foot Locker’s most recent earnings report beat estimates on both the top and bottom lines.

Should You Pull Your Money Out of the Stock Market?

When the stock market drops, some investors get antsy. Watching the market decline in real-time can be stressful. It may even seem like invested money is heading toward zero.

During drops in the market, it can be easy for investors to think that their hard-earned money is going up in smoke. A worried investor might think that it’s better to lose a little now than to forfeit more later by sticking with the markets.

But, is it always a good idea to pull money out of the stock market when there’s a drop? There’s no one-size-fits-all answer for investors. Here’s an overview of factors investors might think about when deciding whether to keep money in the stock market.

Following Russia’s invasion of Ukraine, US consumers could face higher gasoline prices along with higher borrowing costs for mortgages, car loans, and credit cards.
Russia is one of the world’s largest producers of oil, so any disruption of exports could send global prices higher, causing more pain at the pump. Natural gas could also be impacted, raising heating and electricity costs. Generally speaking the invasion could heat up inflation even further, and the Fed may move towards rate hikes at a faster pace — making debt service more expensive.
Read more >>

Property owners are busy with home improvement projects but do-it-yourself projects aren’t what’s currently boosting sales numbers for major retailers.
The pandemic led to major jumps in revenue for The Home Depot (HD) and Lowe’s (LOW), and sales numbers have remained on the rise recently. Both companies say professional contractors and plumbers are accounting for the most growth. Survey data suggests some DIY projects never got finished leading to the hiring of outside help — especially now that COVID-19 numbers have waned.
Read more >>

Venture capitalists are putting money into indoor urban farming and special LED technology that facilitates photosynthesis. It could be growing your next salad’s veggies.
Indoor farming is a popular target for private equity in recent years, as is artificial intelligence. This is reflected in the latest fundraising rounds, as well as a focus on ecommerce — and how AI can help retailers. A number of high profile names are investing in another popular sector: mobile gaming.
Read more >>

Buying and selling stocks based on emotions or gut reactions to temporary volatility can derail your investment plan, potentially setting you back.
It’s human nature to be concerned, or to feel panic at times. But sometimes, the best investment advice is not to give in to your feelings. Here’s what you need to know when the market is down.
Read more >>

Not-So-Breaking News

Chinese ecommerce giant Alibaba (BABA) reported its slowest-ever revenue growth, although the company did beat profit expectations. Analysts say China’s retail sales were generally sluggish during the final quarter of 2021, and Alibaba is facing increased competition and a heightened regulatory environment.
Drugmaker Moderna (MRNA) beat Wall Street estimates for fourth-quarter earnings and increased the number of COVID-19 vaccines it expects to sell this year. The company’s mRNA-1273 coronavirus vaccine, also known as Spikevax, is expected to deliver around $19 billion in revenue in 2022.
Anheuser-Busch InBev (BUD) says it’s expecting profit to increase as the year continues, with more people heading outside of their homes and having opportunities to drink. The world’s largest beer company predicts both higher prices and boosted sales will drive earnings.
Electric and hydrogen truck maker Nikola (NKLA) popped yesterday after company executives predicted between $90 million and $150 million in revenue this year. This is based on the estimated delivery of around 300 to 500 electric semi trucks. The company also posted narrower-than-expected losses.
Online marketplace eBay (EBAY) forecast slowing growth in the coming months, but did beat analyst expectations for quarterly earnings. Analysts maintain eBay could lose customers as more stores reopen and in-person shopping increases.

Financial Planner Tip of the Day

"All investments carry some risk, but the difference between speculating and investing can illustrate the level of risk involved. Speculating often describes scenarios when there’s a high chance the investment will deliver losses but also when the investment could result in a high profit. In contrast, investing generally refers to situations when an individual researches an asset, puts money into it with the hope that prices will rise a reasonable amount over time.”

Brian Walsh, CFP® at SoFi

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