S&P 500 Off Lows, but Remains Pressured by Russia

© Reuters.

By Yasin Ebrahim

-- The S&P 500 moved off session lows Friday, as investors weighed up intensifying Russia-Ukraine tensions against easing expectations for an aggressive Federal Reserve rate hike in March.

The S&P 500 fell 0.2%, the Dow Jones Industrial Average slipped 0.2%, or 53 points, the Nasdaq Composite gained 0.5%.

Russian-backed separatists are believed to have evacuated its citizens from Donetsk in Eastern Ukraine, deepening fears that Moscow was creating false provocation to invade Ukraine.

Fresh fears of an imminent Russia invasion of Ukraine comes as the U.S. and its allies said that Russia has been beefing up its military presence on the Ukraine border, casting doubt on reports that Moscow had recalled some of its troops from the area.

President Joe Biden is set to provide an update on the Russia-Ukraine security crisis at 4:00 PM ET.

The geopolitical tensions have dampened investor bets on a 50 basis point rate hike at the Federal Reserve’s March meeting, with odds of larger hike falling to 18% from about 90% earlier this week.

The prospect of a rate hike in March, however, remains priced in, with New York Fed President John Williams saying Friday the Fed should “steadily” hike rates starting in March.

Falling expectations for aggressive Fed monetary policy tightening weighed on U.S. Treasury yields, helping growth sectors of the market like tech move off the worst levels of the day. 

Technology led the market lower as Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL) and Meta Platforms (NASDAQ:FB) were off session lows.  

Energy was also under pressure, paced by a decline in oil prices as the prospect of a U.S.-Iran nuclear deal, which would remove the export ban on Iranian oil.

“If it had not been for reports that agreement was supposedly imminent in the nuclear talks with Iran, oil prices would have probably already attempted to overcome the $100 per barrel mark,” Commerzbank said in a note.

Mostly underwhelming quarterly earnings, meanwhile, didn’t offer much respite for stocks.

Roku (NASDAQ:ROKU) fell 24% after its quarterly revenue fell short of Wall Street estimates, while softer guidance amid supply chain woes also weighed on sentiment.

DraftKings (NASDAQ:DKNG) slipped 19% as its forecast for a wider-than-expected loss offset quarterly results that beat analysts’ estimates on both the top and bottom lines.

Shake Shack (NYSE:SHAK) fell 4% following softer-than-expected first-quarter revenue guidance offset fourth-quarter results that topped expectations.

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