Stock futures point to a lower open with oil surging past $100 a barrel as Russia’s attack on Ukraine enters its sixth day, with Russia stepping up its offense.
Stocks kicked off the month of March in negative territory on Tuesday and oil surged back above $100 a barrel as investors continue to take a risk-off stance following Russia’s attack against Ukraine and global sanctions that have effectively frozen Russian banks’ ability to function.
On Wall Street, futures tied to the Dow Jones Industrial Average were down 217 points or 0.64% at last check. S&P 500 futures were down 0.7% while Nasdaq 100 futures traded down 0.77%. Oil also edged higher after rising above $100 a barrel, with West Texas Intermediate, the U.S. benchmark, trading at $99.87.
Russia’s invasion of Ukraine, launched last week by President Vladimir Putin with the aim of overthrowing the country’s elected government and ending its alignment with the West, has made slower progress than most military analysts had expected, as Russian forces struggle with fierce Ukrainian resistance and logistical problems.
Heavy fighting continued throughout Ukraine on Tuesday, with Russian forces making advances in the south of the country and trying to push into the capital, Kyiv.
Russian forces struck the central square of the Ukrainian city of Kharkiv early Tuesday, as Moscow switched to a new strategy of pummeling civilian areas in an attempt to demoralize Ukrainian resistance.
Investors have swiftly moved away from stocks amid concern the conflict will both escalate and become protracted, in turn affecting the global economy still recovering from the pandemic.
Stocks slumped Monday while oil prices tested fresh 2014 highs amid a broader rally in commodities prices as western world leaders moved to isolate Moscow from the global financial system.
The Dow Jones Industrial Average ended down 166 points, 0.49%, to 33,892, while the S&P 500, which is down 8% for the year, lost 0.24% and the tech-heavy Nasdaq ended up 0.41%.
Russia’s central bank was effectively blocked from accessing hundreds of billions of U.S. dollars stocked away to help defend its currency, with the ruble left to fall another 30% to an all-time low against the greenback as a result.
Some of the early stock losses were offset by strong earnings from Target (TGT) – Get Target Corporation Report, as the Big Box retailer posted profit of $3.19 a share that was well ahead of Wall Street estimates. Shares jumped nearly 10% in premarket trading.
HP (HPQ) – Get HP Inc. Report, meantime, reported better-than-expected fiscal-first-quarter results. For the quarter ended Jan. 31 earnings per share rose 19% to 99 cents from 83 cents in the year-earlier quarter. Adjusted profit in the latest period was $1.10 a share. Revenue rose 8.8% to $17.03 billion.
A survey of analysts by FactSet produced consensus estimates of profit of 98 cents a share, or an adjusted $1.02, on revenue of $16.52 billion.
The Wall Street Journal reported that HP said Russia’s invasion of Ukraine would cut 2 cents to 3 cents a share from the current quarter’s profit. The company estimated fiscal-second-quarter profit at 95 cents to $1.01 a share, or an adjusted $1.02 to $1.08 a share. FactSet called 99 cents a share, or an adjusted $1.03.
Zoom Video Communications (ZM) – Get Zoom Video Communications, Inc. Class A Report reported better-than-expected fiscal-fourth-quarter earnings. Profit for the quarter ended Jan. 31 nearly doubled to $1.60 a share from 87 cents in the year-earlier quarter. Revenue reached $1.07 billion from $882.5 million. A survey of analysts by FactSet produced consensus estimates of profit of 68 cents a share, or an adjusted $1.07, on revenue of $1.05 billion.
Electric-vehicle maker Lucid (LCID) – Get Lucid Group, Inc. Report reported a wider fourth-quarter loss and cut its production outlook for 2022. The loss widened to $1.05 billion from $297.5 million in the year-ago period. Revenue reached $26.4 million, of which $21.3 million came from initial deliveries of its Lucid Air Dream Edition.
The company now expects to produce 12,000 to 14,000 vehicles in 2022, reflecting “extraordinary” supply chain and logistics challenges. Reports say the company had earlier estimated output at 20,000.
Lucid also said it had signed agreements with Saudi Arabia to build a factory in the kingdom.
Amid ongoing developments overseas and earnings at home, investors also will be tuning in to President Joe Biden’s first State of the Union speech on Tuesday evening.
Reports say Biden will cover a wide range of topics including the steps the U.S. is taking to sanction Russia for its invasion of Ukraine; energy prices and the inflation-hit U.S. economy, the receding Covid omicron strain, his infrastructure plans, and the nomination of Judge Ketanji Brown Jackson as the first black woman to join the Supreme Court.
Investors are also gearing up to hear from Federal Reserve Chair Jerome Powell in his semiannual hearing at House Committee on Financial Services, which begins on Wednesday.
