Market Snapshot: Dow, S&P 500 snap four-session win streak as stocks close lower on fading Ukraine optimism

Read: S&P 500 exits correction: Here’s what history says happens next to U.S. stock-market benchmark

What’s driving markets?

Stocks slipped while oil prices edged higher Wednesday as Russian forces shelled areas around Kyiv and another Ukrainian city overnight, just hours after it pledged to “fundamentally” cut back operations in the areas, Associated Press reported.

“We do expect a little profit-taking after four days of gains but big picture-wise, we continue to expect volatility,” Greg Bassuk, chief executive at AXS Investments, said in a phone interview.

War in Ukraine: Skepticism builds over Russia’s pledge to scale back some operations

In addition to developments in the Russia-Ukraine war, investors also heard from Kansas City Federal Reserve President Esther George, who said the central bank must move expeditiously away from an easy policy stance. That should include a significant reduction of the Fed’s near $9 trillion balance sheet, she said.

“We essentially have an economy that is operating still under very significant stimulus and very low rates compared with historical averages,” said Matt Peden, senior portfolio manager of the Invesco Global Select Equity Strategies, in a phone call.

“That leads to a lot of uncertainty as to the true underlying state of the economy.”

To that end, Peden’s focus is long-term and on stocks that can manage revenue growth despite higher rates, elevated inflation and the threat of an economic slowdown, such as the technology and payment sectors, rather than shorter term plays in commodity and financial companies that have seen gains in recent months.

Crude prices
CL00,
+3.09%
rose 2.5% to $106.88 a barrel, recouping losses from Tuesday when the commodity briefly dipped below $100 for the first time since midmonth.

In U.S. economic data, U.S. fourth-quarter gross domestic product growth was revised to an annualized 6.9% from 7%. Meanwhile, ADP said the private sector added 455,000 jobs in March. Economists surveyed by Dow Jones Newswires and The Wall Street Journal forecast a private-sector payrolls gain of 450,000.

On the COVID-front, the omicron subvariant known as BA.2, which is even more contagious than the original omicron but seems no more lethal, accounted for more than half of new COVID cases in the U.S., according to estimates from the Centers for Disease Control and Prevention on Tuesday.

Investors are also keeping watch on the bond market after the yield on the 2-year Treasury note
TMUBMUSD02Y,
2.318%
 traded briefly above the yield on the 10-year note 
TMUBMUSD10Y,
2.344%
 Tuesday afternoon, temporarily inverting the yield curve.

The phenomenon is widely viewed as an early warning signal of a potential economic downturn, though some analysts caution that it serves as a poor market timing tool. Yields were easing across the board on Wednesday.

“We think investors aren’t so sure that these inverted yield curves really will lead to a recession,” due to “the other, more positive indicators,” according to AXS’s Bassuk.

Which companies are in focus?

Lululemon Athletica Inc.
LULU,
+9.58%’s
shares jumped 10.8% Tuesday, after it topped $6 billion in sales for the first time in 2021, and executives expect it to hit $7.5 billion this year. Lululemon reported fourth-quarter profit of $434.5 million, or $3.36 a share, on sales of $2.13 billion, up from $1.73 billion in the same period a year ago.

Bitcoin miner Stronghold Digital
SDIG,
-32.00%
on Tuesday posted a revenue miss for its fiscal fourth-quarter and a 2022 outlook warning. Its shares were down more than 31% Wednesday. 

Shares of Vir Biotechnology Inc. 
VIR,
+14.75%
 jumped 15.8% on Wednesday, the day after it was announced that the stock will join the S&P SmallCap 600
SML,
-1.84%,
 effective April 4.

Shares of Adagio Therapeutics Inc.
ADGI,
+30.39%
shares surged 38% after the company said primary endpoints were met for three indications in its continuing global Phase 2/3 clinical trials evaluating its investigational drug adintrevimab ADG20 for treating Covid-19.

How did other assets fare?

The yield on the 10-year Treasury note 
TMUBMUSD10Y,
2.344%
 went down 3 basis points to 2.37%. Yields and debt prices move opposite each other.

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

Gold futures closed up, with the June contract
GCM22,
+1.17%
gaining 1.1% to settle at $1,939 an ounce.

Bitcoin
BTCUSD,
-0.57%
 was up about 0.1% at $47,975.

In European equities, the Stoxx Europe 600
FXXP00,
+0.11%
declined 0.4%, while London’s FTSE 100
UKX,
+0.55%
 rose 0.6%.

In Asia, the Shanghai Composite 
SHCOMP,
+1.96%
 closed 2% higher, while the Hang Seng Index 
HSI,
+1.39%
 in Hong Kong gained 1.4% while Japan’s Nikkei 225 
NIK,
-0.80%
 was down 0.8%

—Barbara Kollmeyer contributed reporting to this article.