Stock Market Today: Energy Soars as Russia-Ukraine Volatility Resumes
The major indexes put up mixed results Monday as investors digested a weekend's worth of sanctions, military actions and other changes in the Russia-Ukraine conflict.
American stock markets were volatile again Monday as investors processed a laundry list of new developments in Russia's invasion of Ukraine.
Among those events: The U.S. and European nations have largely coalesced around the Ukrainian cause, providing varying military aid as well as isolating Russia through numerous new sanctions, including banning some Russian banks from using the SWIFT system that enables financial firms to settle cross-border transactions.
Also, as we mentioned in our free A Step Ahead e-letter, these efforts extended to the public markets. On Sunday, BP (BP, -5.0%) said it would exit a nearly 20% stake in Russian oil giant Rosneft, and on Monday, Shell (SHEL, -3.4%) announced it would exit all Russian operations, including a liquefied natural gas plant part-owned by Russia's Gazprom.
Regardless, it was still a great day for energy, which was the strongest S&P 500 market sector at 2.5%. U.S. crude oil futures rocketed 4.5% higher, to $95.72 per barrel, while Brent (global) crude topped $100 per barrel – lifting U.S. exploration and production companies such as Occidental Petroleum (OXY, +12.9%) and EOG Resources (EOG, +7.1%).
Meanwhile, the New York Stock Exchange and Nasdaq temporarily halted trading in several Russian stocks, and broad baskets of Russian equities – including the VanEck Russia ETF (RSX, -30.5%) and iShares MSCI Russia ETF (ERUS, -27.9%) – plunged.
The major indexes fininshed Monday in mixed fashion. The Dow Jones Industrial Average was off 0.5% to 33,892.60, closing down 3.5% across February. The S&P 500 lost a modest 0.2% to 4,373.94, declining 3.1% for the month. And the Nasdaq Composite managed to end the session up 0.4% to 13,751.40, checking out of February with a 3.4% drop.
One thing to watch going forward, say Jason Pride and Michael Reynolds, CIO of private wealth and vice president of investment strategy, respectively, at investment firm Glenmede, are additional supply-chain disruptions.
"The European Union relies on Russia for more than a third of its natural gas supply. Also, Russia and Ukraine combined account for a quarter of global wheat exports," they say. "Additionally, Ukraine is the source of 90% of the world's semiconductor-grade neon and Russia is responsible for 24% of palladium exports. Such large presence in these markets could cause more disruptions to already strained supply chains."
Other news in the stock market today:
- The small-cap Russell 2000 also managed a 0.4% improvement, to 2,048, finishing February better than its large-cap index cousins with a 1.0% gain.
- Gold futures edged up 0.7% to finish at $1,900.70, bringing their monthly gain to 5.8%.
- Bitcoin made an aggressive 7.2% advance to $41,937.38. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Block (SQ) jumped 6.4% after BMO Capital Research analyst James Fotheringham upgraded the fintech stock to Outperform from Market Perform (the equivalents of Buy and Hold, respectively). The analyst expects Block's May 18 investor day to be a potentially positive catalyst for the stock, and expects Square to turn in earnings and growth beats. "Our SQ model is more bullish than consensus due to out-year forecasts for a softer landing for Cash App (faster user growth and broader product monetization) and Afterpay accretion to revenue growth (+2%) and earnings per share (+4%)," Fotheringham says.
- Defense stocks caught a bid as Russia's attack continued. Additionally, among countries increasing aid to Ukraine was Germany, which said it would send 1,000 anti-tank weapons and 500 Stinger missiles. Germany also annnounced it would lift its defense spending above 2% of gross domestic product (GDP) from its 2021 estimated level of 1.53%, per NATO statistics. Raytheon Technologies (RTX, +4.7%), Northrup Grumman (NOC, +7.9%) and Lockheed Martin (LMT, +6.7%) were among those that finished higher.
The 25 Most Popular Blue Chips Among Hedge Funds
Every quarter, we take a long gander at what Wall Street's "smart money" is up to.
Naturally, Warren Buffett tends to dominate the spotlight – his Berkshire Hathaway equity portfolio is regularly scrutinized by those wondering what the world's most famous investor is buying and selling from one quarter to the next.
But we also look at which stocks have garnered the most attention from the hedge fund community.
Yes, hedge funds as a whole actually have a pretty poor long-term track record, but given their collective resources, monitoring their most popular ideas can still be educational. And let's give theim their due: Hedge funds are having a market-beating 2022 – which one would expect, as their hedging strategies are designed to limit downside risk. Unsurprisingly, hedge fund managers are elbow-deep in blue-chip stocks, as their massive market capitalizations and liquidity allow institutional investors to buy and sell in large quantities without drastically affecting pricing in those stocks.
Here, we look at the 25 blue chips that these smart-money managers are stashing away.