Weekly Market Update

Despite being shortened by Presidents’ Day, it was a wild four-day week for markets as geopolitical events in Ukraine and continued headwinds from the Federal Reserve saw the S&P 500 close up or down by at least 1% every trading session. Stocks were notably weak on Tuesday and Wednesday with the S&P 500 officially dipping into correction territory after falling 10% from its all-time highs and re-testing the January lows. On Thursday, investors woke up to a full-scale Russian invasion of Ukraine and all indications pointed to another leg lower for stocks, as morning trading saw the S&P 500 down over -2.5% and -5% lower for the week.

However, stocks staged an epic reversal Thursday afternoon as President Biden’s press conference and sanction announcements went mostly as expected and Russia’s invasion ultimately proved to be a sell the rumor, buy the news event. As a result, stocks bounced off their lowest levels of 2022 to finish Thursday positive, while oil prices defied many pundits’ expectations and declined after surging to $100 a barrel earlier in the day. Despite obvious headline risk over the weekend, Thursday’s rebound carried into Friday and the S&P 500 was actually able to finish the week up about 0.8%, a rather unthinkable achievement less than 30 hours prior. Exactly what drove the end of week strength is impossible to attribute, but the easiest excuses would be headlines that Russia might send a delegation to Minsk to hold high-level talks with Ukraine, coupled with deeply oversold market conditions. Next week, geopolitics will continue to be closely watched, but Friday’s jobs report for February will be particularly important as the Fed’s March 16th meeting announcements loom large.

Ian G. Browning, CFA
Managing Director, Investment Strategies | Shareholder