Russian Troops at Ukraine Border, Potential Fed Rate Hike, Rattle Markets

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NATO disputed Russia's claim it's removing troops from the Ukraine border, stoking geopolitical tensions that coupled with the upcoming release of Federal Reserve minutes to stop a rally in U.S. stocks.

Key Takeaways

  • Rally in stocks halted after NATO disputes Russian claims of pulling troops back from the Ukrainian border.
  • Investors await release of Federal Reserve January minutes for clues to how rapidly interest rates will be hiked.
  • Crude oil continued its march higher on Eastern Europe border tensions

The Dow and S&P 500 are down more than half a percent, while the Nasdaq is falling 1%, a day after all three indexes surged on what appeared to be an easing of tensions in Eastern Europe.

Tech stocks are leading the decline, with Apple Inc. (AAPL) and Microsoft Corp. (MSFT) both losing 1%. Meta Platforms Inc. (FB) shares are 2.5% lower on a report executives held a company-wide meeting aimed at introducing new corporate values and boosting morale. Shares of ViacomCBS Inc. (VIAC) are plunging after the media company announced it was renaming itself Paramount and increasing spending to compete with rival streaming services. Shares of Netflix Inc. (NFLX) and Discovery Inc. (DISCA) are also down. Carmax Inc. (KMX) shares are dropping on an analyst downgrade.

Oil and Gas Prices Up

The Ukraine headlines are sending oil futures up 2.5%, and gasoline prices 1.5% higher. That’s lifting shares of Marathon Oil Corp. (MRO) and other energy companies. Generac Holdings Inc. (GNRC) shares are soaring after the generator maker said it expected exceptional revenue growth this year. 

The yield on the 10-year Treasury note is wavering around 2.05% ahead of the release of the Fed minutes. Bitcoin and other major cryptocurrencies are trading lower. The euro strengthened against the dollar.

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Chart of the Day: Shopping Spree

food sales

Retail sales in the U.S. jumped more than expected last month amid higher inflation and online shopping demand.

 The Census Bureau reported January retail sales were up 3.8%, well above economists’ forecasts and a reversal of December’s revised 2.5% decline. It was the biggest monthly percentage increase since last March. 

Sales at nonstore retailers, which includes online purchases, had the largest jump, up 14.5%. Furniture and home furnishing stores had a sales gain of 7.2%, while motor vehicles and parts dealers recorded a 5.7% rise in sales. 

Lower gasoline prices led to a 1.3% drop in gas station sales, although sales were 33.4% higher year-over-year. The continuing impact of the omicron variant of COVID-19 sent sales of restaurants and bars down 0.9%. Other businesses that had sales declines were sporting goods, hobby, musical instruments, and book stores, health and personal care stores, and miscellaneous retailers.

November Through January Sales

The Census Bureau noted sales during and immediately after the holiday season advanced, sales from November through January rising 16.1% from the same period a year ago. 

Stock of the Day: Shopify (SHOP)

Shopify Inc. (SHOP) shares are sinking after the e-commerce platform warned that a decline in online shopping as COVID-19 restrictions end will lower revenue in the first half of the year.

Shopify said its full-year sales won’t match 2021’s 57% increase because of a number of headwinds. It noted that, for the first six months of 2022, the acceleration in online shopping triggered by the COVID-19 lockdowns and government stimulus will fade. The company also pointed to higher inflation that will impact consumer spending in the short term. 

Shopify anticipates revenue growth to be lower in the current quarter and highest in the fourth quarter.

Fourth Quarter Beats Estimates

The company also reported 2021 fourth-quarter sales jumped 41% to $1.38 billion, and earnings per share came in at $1.36. Both were better than analysts’ forecasts.

 Shares of Shopify are down 17% today. They’ve lost about half their value in the past year.

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