Ukraine’s impact and 2 other things to watch in the stock market next week
NATO leaders meet on the Ukraine conflict as sanctions roil stocks and the global economy. Also: Economic numbers may show the initial impact of the Fed rate hike, and Carnival reports.
After a two-week down market, the major indexes recovered this week and ended in positive territory.
Here’s what happened in the market this week and three things to watch next week that could move your stocks.
Markets turn green
The Nasdaq Composite finished Friday up 8.6% for the week, while the S&P 500 and Dow Jones Industrial Average gained 5.3% and 6.2%, respectively.
Looking at sector performance for the week, consumer discretionary, tech and financials are the biggest outperformers.
Energy, which led the markets in 2021 and the first quarter of 2022, has had its worst week of the year, down about 4%.
Crude oil fell below $100 a barrel this week, dragging down shares of oil companies and the broader energy sector. West Texas Intermediate (WTI) and Brent Crude both climbed back above $100 a barrel Thursday and have been holding above this level through Friday afternoon.
The Federal Reserve on Wednesday approved its first interest rate increase in more than three years, and the markets rose in response. Perhaps investors were reassured that the economy was strong enough to endure the Fed’s more restrictive monetary policy measures to combat rising inflation.
Here’s what to watch next week:
1. Major economic reports and indicators
As we head into the second week following the Fed’s meeting and the first of seven rate hikes it sees coming in 2022, investors should watch a few notable economic reports and indicators slated for release.
On Wednesday, the US Census Bureau will release its monthly new residential sales report for the month of February, giving us some insight into the red-hot housing market.
New home sales fell 4.5% to a seasonally adjusted annual rate of 801,000 units last month. December’s sales rate was revised higher to 839,000 units from the previously reported 811,000 units.
The US Department of Labor (DoL) is slated to release its weekly jobless claims report on Thursday. New unemployment claims improved last week, with the DoL reporting 214,000 initial jobless claims versus the revised 229,000 the week before. At 214,000, new claims were at their lowest level of 2022.
To close out the week, on Friday, we’ll get the University of Michigan’s final five-year expectation for inflation. The University of Michigan’s Survey of Consumers report measures consumer sentiment and reports inflation expectations over both one and five years. Inflation is driving the Fed’s plans, and any change in those plans could stir up stocks.
2. Biden participates in NATO summit
President Joe Biden is scheduled to travel to Brussels, Belgium, next week to meet with NATO leaders on Thursday, March 24.
The “extraordinary summit,” convened by NATO Secretary General Jens Stoltenberg, will address Russia’s invasion of Ukraine and how the intergovernmental organization will further strengthen NATO’s ongoing deterrence and defense measures.
The president will “discuss ongoing deterrence and defense efforts in response to Russia’s unprovoked and unjustified attack on Ukraine, as well as to reaffirm our ironclad commitment to our NATO allies,” White House Press Secretary Jen Psaki told reporters at her Tuesday press briefing.
President Biden will also take part in the European Council summit on Thursday and Friday. That meeting, Psaki said, will include discussion of international economic sanctions on Russia and providing humanitarian support to victims of the war.
Hope for a settlement has been moving the market recently, given the impact of Russian sanctions and bans on the global markets and pocketbook issues like oil prices.
Last Tuesday, the US implemented a ban on Russian oil, liquified natural gas and coal. The United Kingdom said it will phase out Russian oil imports by the end of 2022. Russia hit back at Western sanctions and bans by imposing export bans on more than 200 products until the end of 2022. As a result, commodities like steel, wheat and copper have seen prices soar.
3. Carnival Cruise Line reports earnings midweek
Carnival Cruise Line (CCL) is expected to report earnings midweek, so this will give investors an early look at whether people are cruising again as new coronavirus cases continue to trend lower.
Carnival’s cruise schedule is starting to pick up as it heads into the busy spring travel season. The cruise line has 17 ships scheduled to be operating by year-end.
In 2020, during the height of the pandemic, the cruise line industry saw passenger embarkations drop 81% from 2019, cruise-supported jobs fall 51% and the industry’s total economic contribution fall 59%, according to Cruise Lines International Association (CLIA).
The CLIA calls 2022 “a pivotal transition year for the cruise industry, with full recovery projected in 2023.”
For a look at ways to invest in the cruise line industry, visit our dedicated guide to investing in cruise stocks.
At the time of publication, Matt Miczulski did not own shares of any equity mentioned in this story.
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