Dow futures fall as oil prices rise due to the Russia-Ukraine war

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A trader works on the floor of the New York Stock Exchange (NYSE) in New York City, USA, March 2, 2022. REUTERS / Brendan McDermid

Brendan McDermid | Reuters

US stock futures fell Sunday evening as US oil prices momentarily jumped to their highest level since 2008 amid the ongoing war between Russia and Ukraine.

Dow futures lost 365 points, or 1.09%, while S&P 500 and Nasdaq 100 futures slipped 1.4% and 1.75%, respectively.

West Texas Intermediate crude oil futures, the US oil benchmark, traded 7.68% higher to $ 124.56 a barrel, before hitting $ 130 a barrel at one point before partially retreating. The international benchmark, Brent crude, was trading up 9% to $ 129.17 a barrel after climbing to $ 139.13 a barrel, its highest since July 2008.

Secretary of State Antony Blinken said on Sunday that the United States and its allies are considering banning Russian imports of oil and natural gas in response to the country’s attack on Ukraine.

President Nancy Pelosi also said in a letter to fellow Democrats that the US House of Representatives is “exploring strong legislation” to ban the import of Russian oil, a move that “further isolates Russia from the global economy” .

Gas prices have risen to their highest level since 2008, with the national average exceeding $ 4 a gallon, according to AAA.

Scheduled evacuations from the cities of Mariupol and Volnovakha were canceled on Saturday after Russia violated a ceasefire agreement and fighting continued in or around both cities. Mariupol city council said on Sunday that Russia has again violated a second attempted temporary ceasefire that would have allowed its civilians to leave.

On Friday, the Dow was down 179 points, or 0.5%, to reach its fourth straight week of losses. The S&P 500 fell 0.7% and closed more than 10% since its record close, a technical correction. The Nasdaq Composite fell 1.6%.

The moves came as investors continued to monitor developments in the war between Russia and Ukraine, which weighed heavily on sentiment despite positive US economic data released on Friday.

“Investors aren’t really just jumping in and out, what they’re doing is swinging from Europe to the US, from cyclical stocks to defensive big cap names,” said Lindsay Bell, chief markets and money strategist at Ally. to CNBC’s “Closing Bell”. . “” This is a positive sign, but what we will need to see is that re-rotation in the fastest growing and riskiest areas of the market to show that perhaps the risk-on mode is back in play. “

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Energy stocks have been a positive spot in the market as oil prices rise. Occidental Petroleum gained a whopping 17%. Meanwhile, bank stocks, which benefit from higher interest rates, fell as the benchmark 10-year Treasury fell to around 1.73%.

European equities fell sharply and ended the week 7% lower, marking the worst period since March 2020. ETF VanEck Russia, one of the few Russian-related funds still in trading, fell 2% to finish the week. week down by more than 60%.

Positive data from the US Department of Labor wasn’t enough for investors to shake off concerns about the war between Russia and Ukraine. The Bureau of Labor Statistics reported Friday that the economy added 678,000 jobs in February. According to Dow Jones, monthly jobs exceeded economists’ expectations of 440,000. The unemployment rate fell to 3.8%.

For the week, the Dow and the S&P 500 were down roughly 1.3%. The Nasdaq Composite lost about 2.8%.

“This is an example of people who want to get defensive over the weekend and don’t want to risk it while we’re watching the situation unfold, so the bond market completely ignored the job report,” Jeff Sherman, deputy chief investment officer at DoubleLine Capital said Friday “Closing bell”. “The Treasury market right now is not focused on retrospective economic data, it is looking at the current crisis we are facing, the situation in Ukraine.”

Several reports on economic data are expected to be released over the next week, including the February Consumer Price Index, due Tuesday. The key indicator should show that inflation continues to rise sharply, which could keep the equity market volatile into the coming week.

The February Job Openings and Job Turnover Survey, or JOLTS, is scheduled for Wednesday.

A quieter earnings week is on deck. Some big tech names like Oracle, CrowdStrike, and DocuSign should report. They will also report Rivian Automotive, Ulta Beauty and Bumble.

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