By Christine Idzelis and Mark DeCambre
Bets on a sharper Fed interest-rate rise in March eased somewhat in light of the threat of military conflict, but investors remained concerned by the question of how markets will cope as fiscal and monetary stimulus ebbs.
St. Louis Federal Reserve President James Bullard, who has called for more aggressive rate increases than his colleagues, on Thursday said too m uch “mindshare” has been devoted to the idea that inflation will moderate at some point.
On Friday, president of the New York Federal Reserve, John Williams , said it would be “appropriate” to raise the central bank’s benchmark short-term interest rate in March and begin to reduce its $9 trillion stockpile of bonds “later this year.”
Also on Friday , Chicago Fed President Charles Evans said he sees no need for extra restrictive rate hikes, which triggered past recessions, in remarks to the U.S. Monetary Policy Forum.
In U.S. economic data, existing-home sales increased by nearly 7% between December and January, hitting a seasonally-adjusted, annual rate of 6.5 million, the National Association of Realtors said Friday. Economists polled by MarketWatch expected the pace of home sales to come in at 6.1 million.
Separately, an index of leading economic indicators for the U.S. fell 0.3% in January on surging omicron cases, high inflation and persistent supply-chain disruptions. The decline in the index was the first since last spring. Wall Street had expected a small increase. The LEI is a weighted gauge of 10 indicators designed to signal business-cycle peaks and valleys.
Leading economic indicators “did disappoint this morning,” Sasaki said. He expects U.S. economic growth will “remain positive” this year, but that it will be slower and “more sustainable.”
The market should do “just fine” in 2022 even with expected rate hikes from the Fed, as stocks will be supported by “positive earnings growth,” according to Steven Violin, a portfolio manager at F.L.Putnam Investment Management Company.
As for buying opportunities in U.S. equities, the shift into value from growth “is pretty well advanced,” said Violin, in a phone interview Friday. “Some growth stocks have declined enough to become attractive,” he said, “and some value stocks have appreciated enough to become unattractive.”
Shares of the iShares S&P 500 Growth ETF /zigman2/quotes/208542267/composite IVW +0.28% are down around 13.5% this year, while iShares S&P 500 Value ETF /zigman2/quotes/206097129/composite IVE +0.04% has declined about 3.2%, according to FactSet.
In Violin’s view, “there seems to be a lot more runway for value stocks outside the United States.”
Which companies were in focus?
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Roku Inc. /zigman2/quotes/205087179/composite ROKU +0.55% reported earnings Thursday that topped Wall Street forecasts but fourth-quarter revenue that didn’t. The company also warned of continuing supply-chain disruptions. Shares fell about 22.3%.
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Shares of DraftKings Inc. /zigman2/quotes/213120645/composite DKNG -2.43% dropped 21.6% as the online betting company’s upbeat forecast on profitability in 2023 was overshadowed by a wider-than-expected projected loss in 2022 as competition in online sports gambling intensifies.
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Shares of Ford Motor Co. /zigman2/quotes/208911460/composite F +1.18% rose 2.9% amid reports that it is considering separating its electric-vehicle operation from its legacy car and truck manufacturing, a move seen boosting its competitiveness against singularly EV-focused makes such as Tesla Inc . /zigman2/quotes/203558040/lastsale TSLA +4.06% , according to a Bloomberg News report Friday. Tesla’s shares fell 2.2%.
How did other assets fare?
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The yield on the 10-year Treasury note TMUBMUSD10Y fell 4.2 basis points Friday to 1.93%. For the week, the yield fell 2.1 basis points. Yields and debt move opposite prices.
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The ICE U.S. Dollar Index DXY , a measure of the currency against a basket of six major rivals, edged up 0.3%.
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Oil futures fell, with West Texas Intermediate crude for March delivery CL.1 slipping nearly 0.8% to settle at $91.07 a barrel. The front-month March contract posted a 2.2% weekly loss .
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Gold futures GC00 for April delivery slipped 0.1% to settle at $1,899.80 an ounce. For the week, gold rose 3.1% for its biggest weekly rise since May 2021.
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The Stoxx Europe 600 SXXP closed 0.8% lower and booked a 1.9% weekly slump, while London’s FTSE 100 UKX finished 0.3% lower on Friday, contributing to a 1.9% weekly decline .
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In Asia, the Shanghai Composite SHCOMP rose 0.7% and booked a 0.8% weekly advance. The Hang Seng Index HSI declined 1.9% in Hong Kong for a 2.3% drop for the week. Japan’s Nikkei 225 NIK fell 0.4% on the session for a 2.1% weekly decline.
– –Clive McKeef contributed to this article.
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