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Stock Futures: Mixed Signals as Market Grapples with Inflation, Geo-Political Tensions
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Stock Futures: Mixed Signals as Market Grapples with Inflation, Geo-Political Tensions

Two of the major U.S. stock market futures inched up as investors processed the two major domestic and global developments — the 40-year high inflation and the approaching Ukraine-Russia war. S&P 500 futures rose 0.01% and the Dow Jones futures inched up 0.03%. However, Nasdaq 100 futures remained in the red, retracting 0.04% as we speak.

What Happened on Friday

The major indexes of the U.S. stock market closed lower on Friday, February 11, after the White House requested that Americans depart from Ukraine immediately, in light of the growing presence of Russian troops on the Ukrainian border. The government warned that Russia and Ukraine are at the brink of a war. The S&P 500 (SPX) index dropped 1.9% and the Dow Jones Industrial Average (DJIA) dipped 1.43%. The tech-heavy Nasdaq 100 (NDX) index took the hardest blow, closing 3.07% lower.

The decline was led by a sharp drop in semiconductor stocks, as investors grew increasingly wary about the adverse impact the war can have on the semiconductor supply chain, particularly the supply of semiconductor-grade neon. As it is, majority of the semiconductor companies are operating at maximum capacity, and any imbalance in the supply chain could disrupt the entire system.

The biggest losers of Friday were the semiconductor heavyweights including AMD (NASDAQ: AMD) which fell 10.1%, Xilinx (NASDAQ: XLNX) which dove 10%, Nvidia (NASDAQ: NVDIA) which dipped 7.26%, and Marvell (NASDAQ: MRVL) which shed nearly 8%.

Oil Prices Surge Across the Globe; Bond Yields Rise

The percolating Russia-Ukraine war is also pushing oil prices higher, as the global markets weigh in the consequences of a possible war on their access to Ukraine’s oil reserves.

In the early trading hours of the Asian markets, the international benchmark Brent crude futures climbed 1.1% to $95.64 per barrel. The oil price increase was felt in the U.S. markets as well, with a 1.28% rise in U.S. crude futures.

This apart, the hot inflationary environment also has investors looking for safer havens, including Treasury bills and less risky stocks. Notably, according to the CPI data released last week, the inflation rate in January surged 7.5%. This explains the spike in bond yields on Friday.

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