Market Snapshot: U.S. stocks close lower as investors monitor commodity surge, Russia-Ukraine war and the impact on Fed policy

What’s driving markets

Federal Reserve Chairman Jerome Powell was speaking before the Senate Banking Committee, a day after saying on Wednesday he would recommend a quarter-point rate increase in two weeks time. Powell left the door open to more substantial increases in future months if inflation doesn’t subside.

“If the Fed hikes 25bp in March that will have no impact on inflation in the coming several months. So, the question is not whether the Fed rate hikes are controlling inflation, but whether the predetermined course of inflation will brake lower sooner enough to stop the Fed/Powell from taking a more aggressive step or steps later,” said Robert Brusca, chief economist at FAO Economics.

Michael Brown, senior market analyst at Caxton FX, called Wednesday’s market rebound a “bear-market squeeze,” and said the S&P 500 will struggle to clear its 200-day moving average until the Ukraine crisis de-escalates.

Russian Foreign Minister Sergei Lavrov said his country was ready for peace talks but will continue to attack what he called Ukraine’s military infrastructure. The United Nations reported that the refugee count has now topped 1 million.

The U.S. oil benchmark
CL.1,
+0.19%
pulled back from a nearly 14-year high, after an Iranian journalist tweeted that a restored nuclear deal that would allow Iran to resume exports was near. Crude and other commodities have soared in the wake of the invasion as buyers have shunned Russian supplies due to fears of running afoul of sanctions by Western powers and logistical obstacles.

Meanwhile, MSCI and FTSE Russell both said they would remove Russian stocks from their indexes next week, as Moody’s and Fitch cut Russia’s sovereign credit rating to junk.

First-time applications for unemployment benefits fell by 18,000 to a two-month low of 215,000 in the past week of February, pointing to a pickup in hiring and declining layoffs as the economy rebounded from a omicron-induced lull. Economists polled by The Wall Street Journal had forecast initial jobless claims to total a seasonally adjusted 225,000 in the seven days ended Feb. 26.

The Institute for Supply Management said its barometer of business conditions at service-style companies such as retailers and restaurants fell 3.4 points in February to a one-year low of 56.5%, reflecting still-severe shortages of supplies and labor that are hampering the economy. Economists had forecast a reading of 61% in the Institute for Supply Management’s services index. A figure above 50% indicates growth in activity.

Which companies are in focus?

Shares of Snowflake Inc.
SNOW,
-16.28%
dropped 15% after the software company late Wednesday suggested product sales were likely to slow down this year.

Okta Inc.
OKTA,
-9.98%
shares were down 10% after the enterprise software maker late Wednesday reported fiscal fourth-quarter results.

Victoria’s Secret & Co.
VSCO,
+2.89%
late Wednesday reported quarterly profit and sales that surpassed Wall Street estimates but projected a dimmer first quarter, saying it expects inflation to be a concern throughout the year for retailers. Shares rose 3%.

What are other assets doing?

The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.864%
fell around 2 basis points to 1.84%.

The ICE U.S. Dollar Index
DXY,
+0.58%,
a measure of the currency against a basket of six major rivals, was up 0.5%.

Gold futures
GC00,
+0.45%
edged up 0.4% to $1,930 an ounce.

Bitcoin
BTCUSD,
-3.50%
was down 3% near $42,624.

The Stoxx Europe 600
SXXP,
-2.01%
fell 2%, while London’s FTSE 100
UKX,
-2.57%
was down 2.6%.

In Asia, the Shanghai Composite
SHCOMP,
-0.09%
edged down 0.1%, while the Hang Seng Index
HSI,
+0.55%
rose 0.6% in Hong Kong and Japan’s Nikkei 225
NIK,
+0.70%
gained 0.7%.