© Reuters. The logo for the New York Stock Exchange (NYSE) is displayed on the floor of the NYSE in New York City, U.S., March 29, 2022. REUTERS/Brendan McDermid
By Chuck Mikolajczak
NEW YORK (Reuters) – U.S. stocks fell on Wednesday, with the Dow and on track to snap four-session winning streaks, as recent signs of progress for peace talks between Ukraine and Russia waned against a backdrop of a hawkish central bank denting economic growth.
Russian forces bombarded the outskirts of Kyiv and a besieged city in northern Ukraine on Wednesday, a day after promising to scale down operations there in what the West dismissed as a ploy to regroup by invaders suffering heavy losses.
While the S&P has rebounded more than 5% in March after starting the year with two straight monthly declines, the benchmark index is on track for its first quarterly decline since the first quarter of 2020, when the COVID-19 pandemic in the United States was reaching full swing.
Even with the recent advance, stocks have been highly sensitive to headlines about any progress for a deal to resolve Russia’s invasion of Ukraine, with already-high inflation being fueled further by rising commodity prices such as oil and metals since the war began.
“Ukraine is the controlling narrative for this market, if we are going to get a settlement and we get the potential from that settlement for lower energy prices, which is really the key, and then some sort of return to normalcy in terms of the world economy that is a real positive for the market,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.
“If not, we are going to continue to just go back and forth here as the market tries to digest who the winners and losers are because there are a lot of unintended consequences coming out of this war,” Meckler added.
The fell 146.09 points, or 0.41%, to 35,148.1, the S&P 500 lost 34.42 points, or 0.74%, to 4,597.18 and the dropped 153.76 points, or 1.05%, to 14,465.87.
The environment of sharply rising prices has prompted speculation that the Federal Reserve may have to become more aggressive in raising interest rates to curb high inflation, which would put a damper on economic growth.
In a reversal of its performance in Tuesday’s session, the S&P energy index was the leading sector on the plus side and is now up nearly 40% on the year, which would mark its strongest quarterly performance ever.
The sector is currently one of only three that are positive on the year and it has far outpaced the next closest performer in utilities, which are up nearly 4% on the year but touched a record high on Wednesday for a fourth straight session as investors favor defensive and value stocks.
Recent signals in the bond market that often act as precursors to a recession, with parts of the yield curve having inverted, have helped fuel a defensive stance among investors as concerns swirl that the Fed may become too aggressive and make a policy mistake.
Still, economic data showed the labor market remains strong as the ADP National Employment Report showed private payrolls rose by 455,000 jobs last month after advancing 486,000 in February. The data comes ahead of Friday’s key payrolls report.
Lululemon Athletica (NASDAQ:) Inc surged 11.09% after forecasting full-year profit and revenue above estimates, as demand for athletic wear remains strong.
Declining issues outnumbered advancing ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored decliners.
The S&P 500 posted 43 new 52-week highs and no new lows; the Nasdaq Composite recorded 50 new highs and 31 new lows.