Coffee With Greta: Russia Attacks Ukraine
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DJIA Futures: -812 (-2.5%)
SPX Futures: -108 (-2.6%)
NASDAQ Futures: -432 (-3.2%)
Good morning friends!
Futures are sharply lower after Russia attacked Ukraine overnight.
Let’s get right to it!
Russia Attacks Ukraine
Russia invaded Ukraine overnight after President Vladimir Putin announced a special “military operation” in the country.
Putin claims the goal was to demilitarize Ukraine, not occupy the country.
He also warned countries that try to interfere will face “consequences they have never seen.”
Airstrikes have been reported in the capital city of Kyiv, Odessa, Kharkiv, and Mariupol.
Ukraine says Russia has conducted more than 30 strikes on civilian and military infrastructure.
NATO Secretary General Jens Stoltenberg said the military alliance will increase its presence in eastern Europe in response.
President Biden is meeting virtually with G7 leaders today and is expected to announce severe sanctions against Russia.
Oil, Metal Prices Surge
Oil prices are surging amid the Russian attack on Ukraine.
Brent crude futures are up more than 8%, at nearly $105 per barrel.
It’s the first time prices have topped $100 since 2014.
U.S. West Texas Intermediate futures are also up 8% and hovering just below $100.
Natural gas prices are up 6%.
Russia is the second-largest oil exporter in the world and largest natural gas exporter.
The conflict is expected to cause gas prices in the U.S. to rise sharply.
Fears of a supply disruption are also rocking the metals market.
Aluminum prices jumped more than 3% to a record high $3,450 per ton on the London Metal Exchange.
Nickel is trading at $25,000 per ton, the highest level in more than a decade.
Platinum prices are up more than 2% with palladium surging more than 6%.
The conflict is expected to cause gas prices in the U.S. to rise sharply.
Russia is a producer of all four metals.
The country supplies 35% of global palladium, 10% of platinum, 6% of aluminum, and 5% of nickel.
Weekly Jobless Claims Beat Expectations
The Labor Department says 232,000 Americans filed initial claims for unemployment benefits last week.
That was down 17,000 from the previous week and better than 235,000 expected.
Continuing jobless claims fell by 112,000 to 1.48 million vs 1.58 million expected.
That's the lowest level of continuing claims since March 1970.
Q4 GDP Revision
The Bureau of Economic Analysis revised Q4 GDP growth higher to 7% annually from 6.9%.
For all of 2021, GDP rose 5.7%.
That's the fastest calendar-year growth since 7.2% in 1984.
Today's revision included increases in private inventory investment, exports, PCE, and nonresidential fixed investment.
Those increases were partly offset by decreases in federal, state and local government spending.
Alibaba Earnings
Alibaba (BABA) shares are down 8.6% ahead of the open after reporting its slowest revenue growth ever.
The Chinese e-commerce giant reported earnings of 16.87 yuan per share on 242.58 billion yuan in revenue.
EPS beat expectations but revenue fell short.
Sales were up 10% year-over-year, which is the company slowest quarterly growth rate since listing in the U.S.
Moderna Earnings
Moderna (MRNA) shares are down 4.1% in premarket trade despite beating Q4 expectations.
The pharmaceutical giant reported earnings of $11.29 per share on $7.2 billion in revenue.
That beat expectations for EPS of $9.90 on $6.78 billion in revenue.
Full-year revenue totaled $18.5 billion in 2021, including $17.7 billion from its Covid vaccine.
Moderna hiked its 2022 sales forecast for the vaccine by $2 billion to $19 billion.
Market Correction Deepens
The major indexes fell sharply on Wednesday as the market continues to monitor the conflict between Russia and Ukraine.
The S&P 500 slid for the fourth straight session, closing 1.6% lower.
The Dow and the Nasdaq both notched a five-day losing streak.
The Dow closed at its lowest level yet in 2022.
The Nasdaq is nearing bear market territory, down more than 18% from its last closing record in November 2021.
New Home Sales Preview
The Census Bureau reports January new home sales at 10:00 a.m. ET.
Consensus expectations are that sales fell to a seasonally adjusted annual rate (SAAR) of 803,000 units last month.
But existing home sales jumped unexpectedly in January.
The National Association of Realtors reported existing sales rose 6.7% last month to a seasonally adjusted annual rate of 6.5 million units.
Many economists attributed that surprise increase to buyers rushing to get into the market before mortgage rates rise further.
The average 30-year rate is now above 4% for the first time since 2019.
In Case You Missed It
- Lowe’s (LOW) beat Q4 expectations as the home improvement retailer benefits from high home values. The company hiked its full-year forecast after beating expectations on the top and bottom line. Lowe’s brought in earnings of $1.78 per share on $21.34 billion in revenue at the end of 2021. LOW shares closed 0.2% higher Wednesday.
- The market has adjusted its expectations for Fed rate hikes. CME Group’s FedWatch Tool shows 71% of traders believe the Central Bank will raise rates by 0.25% in March. That’s a reversal from 89% who expected a 0.5% rate increase one month ago.