Stocks Fall With Nasdaq, S&P 500 Heading for Weekly Declines

Stock market chart

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The Dow Jones Industrial Average (DIJA) is poised to be the only major U.S. index to gain this week, as investors weigh solid quarterly earning reports against the potential for a series of interest rate hikes this year.

The Dow is little-changed this afternoon. The Nasdaq and S&P 500 are both falling.

Key Takeaway

  • Stocks are mixed to mostly lower, with the Dow Jones poised to be the only major U.S. index to pull out a gain this week.
  • The yield on the 10-year note continued to advance, reaching 2.06%.
  • The mixed picture may reflect investors' uncertainty over interest rate hikes amid strong corporate earnings and a potential easing in geopolitical concerns.
  • Newell Brands' shares soared after the owner of the Elmer's and Coleman brands reported better-than-expected profits.

Energy company stocks are rising with oil futures moving above $91 a barrel again after the International Energy Agency (IEA) warned undersupply could send prices even higher. Expedia Group Inc. (EXPE) shares are up as the travel site said the omicron variant of COVID-19 had less of an impact on its business than other variants of the virus. The travel sector at large came out ahead this week, with all four big airlines set to end the week up around 10%.

Automakers are gaining after Canadian truck drivers protesting COVID-19 mandates agreed to allow some traffic to flow on a key bridge connecting the U.S. and Canada.  

Transportation Costs Affect Under Armour

Shares of Under Armour Inc. (UA) are sinking as the athletic attire retailer warned higher freight costs will reduce profits in the coming months. Lower-than-expected guidance is sending shares of Zebra Technologies Corp. (ZBRA) down. 

The yield on the 10-year Treasury note hit 2.06%, its highest in more than two years. Bitcoin and other major cryptocurrencies are trading lower. The euro's slide against the dollar continued.

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Chart of the Day: Seven Up

7 up

Goldman Sachs (GS) is the latest major bank to predict the Federal Reserve will raise interest rates seven times this year in an effort to combat inflation. 

Economists led by Jan Hatzius lifted their estimate from five rate increases after yesterday’s Labor Department report showed consumer inflation soared at the fastest annual pace in four decades.

The bank anticipates the Fed will raise rates by 25 basis points (BPS) at each of its meetings in 2022, beginning next month. The economists added they don’t believe a 50 BPS increase will happen in March as some have predicted, based on comments from several Fed officials. However, they pointed out St. Louis Fed President James Bullard has called for a one percentage point jump in the Fed Funds Rate by the beginning of July, and the economists noted if other Fed members join him, they would consider changing their forecast. 

Bank of America Says Seven, Too

Two weeks ago, economists at Bank of America (BAC) also announced they expected seven rate hikes this year. The bank anticipated the Fed Funds Rate at the end of the year to be 2.75% to 3%, and argued that would cause a "lag" in the economy, impacting 2023 growth.

Stock of the Day: Newell Brands Inc.

Newell Brands (NWL) is the best-performing stock in the S&P 500 after the consumer products company posted a better-than-expected fourth quarter earnings report. 

The maker of such diverse products as Elmer’s glue, Mr. Coffee coffeemakers, and Coleman lanterns reported revenue rose 4.3% to $2.81 billion, with earnings per share of $0.42. Both were above analysts’ forecasts. The company noted sales were 6.9% higher than in the fourth quarter of 2019 before the COVID-19 pandemic hit.

CFO Chris Peterson said effective cost management and decisive actions to mitigate the impact of inflation, as well as stronger sales, “drove upside to our expectations on operating profit.” 

Sales of Outdoor Products Jump

Newell Brands had year-over-year core sales increases in all its operating segments, led by its Outdoor and Recreation unit, which had a 23.9% gain. 

Shares of Newell Brands are up 13% today, but they’re down 5% over the past year.

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