Wednesday March 2nd

U.S. stock market index futures rose Wednesday morning as oil prices surged amid the intensifying conflict between Russia and Ukraine. Futures tied to the Dow Jones Industrial Average gained 105 points, or 0.3%. S&P 500 and Nasdaq 100 futures gained about 0.2% and 0.1%, respectively. All three futures contracts had earlier traded in negative territory. The moves came as oil prices trekked upward, building on a massive move in the previous session. Futures for both U.S. crude and international benchmark Brent crude futures rose about 7% each. West Texas Intermediate most recently traded at $111.75 and Brent was at $113.45. The move appeared to boost oil stocks, with Exxon and Chevron each rising about 2% in premarket trading. However, the rising energy costs have also increased concerns about inflation and a potentially slowing economic recovery. “Yesterday’s price action, which saw Fed tightening expectations get pushed out, global yields plunge, the U.S. dollar & gold strengthen, and equity markets (ex-Energy) selloff sharply, strongly suggests that investors are increasingly pricing in a potential sharp slowdown,” Wolfe Research’s Chris Senyek said in a note to clients. Some corporate news helped point the session in a positive direction. Shares of Ford popped 4.6% in premarket trading after the automaker announced that it would split its electric vehicle and legacy production businesses into two separate units. Salesforce rose more than 3% after the software giant beat estimates on the top and bottom lines for its fourth quarter. After slumping in Tuesday trading, government bond yields surged Wednesday. The benchmark 10-year note most recently yielded close to 1.765% after falling below 1.7% the day before. However, investors remained on edge as reports Wednesday indicated that Russian forces penetrated Kherson and have surrounded Mariupol, two key cities in the southern part of the country. Markets also were digesting the State of the Union speech from President Joe Biden, who offered little in the way of new policy details while urging support for Ukraine and reiterating many of the goals for his domestic agenda. “Some of the push for policies appeared to show his base he is still fighting for the issues they care about, but the reality remains that his political standing is perilous with an approval rating hovering around 40%,” wrote Ed Mills, Washington policy analyst for Raymond James. Earnings boosted several other stocks in extended trading. Nordstrom spiked by nearly 35% on strong earnings while SoFi surged around 18%. On the downside, First Solar shares tumbled nearly 15% after the company misses estimates on revenue and issued disappointing guidance In trading Tuesday, the Dow fell 597 points, or 1.76%. The S&P 500 lost 1.55% and the Nasdaq Composite slid 1.59%. “This dramatic dislocation is due to a flight to safety where U.S. production is viewed as more reliable than other global sources,” Jay Hatfield, founder and CEO of Infrastructure Capital Advisors, said of the spike in WTI. “However, it is unlikely to persist after the Ukraine situation stabilizes.” Fed Chair Jerome Powell will testify before Congress on Wednesday to give his semiannual monetary policy update. The central bank chief will say that rate hikes are likely to begin this month despite the “highly uncertain” impact of the war in Ukraine, according to prepared remarks. Investors are also looking toward a key employment report on Friday. Private companies in the U.S. added 475,000 jobs in February, ADP said Wednesday. Economists polled by Dow Jones were expecting 400,000. The firm also revised its January numbers upward. Earnings season continues with several tech companies set to report on Wednesday. Okta, Pure Storage and C3 AI will report after the market closes. ChargePoint is also scheduled to report after the bell. Shares in Asia-Pacific mostly tumbled in Wednesday trade as the ongoing Russia-Ukraine conflict continued to lead to a surge in oil prices. The Nikkei 225 in Japan dropped 1.68% to close at 26,393.03 while the Topix index shed 1.96% to 1,859.94. Hong Kong’s Hang Seng index shed 1.85%, as of its final hour of trading. Mainland Chinese stocks also finished the trading day in negative territory, with the Shanghai composite down 0.13% to 3,484.19 while the Shenzhen component declined 1.05% to 13,346.96. Meanwhile, South Korea’s Kospi closed 0.16% higher at 2,703.52. Palladium rallied for a third straight session on Wednesday as sanctions slapped on Russia over Ukraine aggravated supply concerns, while gold eased as U.S. yields ticked up and the dollar charged higher. Palladium , used by automakers in catalytic converters to curb emissions, was up 1% at $2,604.61 by 1028 GMT, having hit its highest since July at $2,722.79 on Tuesday. Driving a slight retreat in gold, the U.S. dollar index hit its highest since May 2020, making the metal more expensive for overseas buyers. Benchmark 10-year U.S. Treasury yields also firmed, drawing some investors away from non-interest bearing bullion. Spot gold fell 1% to $1,924.00 per ounce. U.S. gold futures dipped 0.4% to $1,935.60.