Weekly Market Recap

Published Mar. 19, 2022
Ukraine Russia Pece War

WEEKLY MARKET SUMMARY

Dow Jones S&P 500 Nasdaq
34,754 (+5.32%)
4,463 (+6.20%)
13,893 (+8.59%)

Peace talks continue between Russia and Ukraine

The fourth round of peace negotiations between Russia and Ukraine took place on Monday. Mykhailo Podolyak, a Ukrainian presidential advisor, said on Twitter that talks were underway but “challenging.” Earlier in the day, he stated that Kyiv’s goals were to negotiate a cease-fire, the evacuation of Russian forces from Ukraine, and other security assurances.

According to the Associated Press, Monday’s meeting comes one day after Russia launched a missile attack on a military camp in western Ukraine, killing 35 people and bringing the bloodshed to within 15 miles of the Polish border. According to the United Nations, at least 596 civilians have died as a result of Russia’s invasion of Ukraine.

Buffett’s Berkshire Hathaway adds to stake in Occidental Petroleum

Berkshire Hathaway has increased its stake in Occidental Petroleum to a new high. According to a regulatory statement, the Warren Buffett-led conglomerate spent nearly $1.5 billion for 27.1 million shares last week. Berkshire’s investment in Occidental now stands at 118.3 million shares, valued at about $6.9 billion as of Friday’s close. Berkshire Hathaway disclosed its stake in the oil company on March 4, revealing that it owned 91.2 million shares of ordinary stock at the time. Occidental is now one of Berkshire’s top ten public company interests.

Oil prices continue to fall, WTI below $100 per barrel

Oil fell on Tuesday, continuing its recent downward trend after the Russia-Ukraine conflict raised supply fears and skyrocketed prices. The U.S. oil benchmark, West Texas Intermediate crude futures, plummeted over 6% to trade below $97 per barrel, the lowest level since March 1. WTI briefly hit $130 just over a week ago. Brent crude, the international standard, was trading around $100.67 per barrel on Tuesday, down roughly 6% for the day. Brent reached a high of $139.13 per barrel on March 7, the highest since July 2008. The drop in oil prices coincides with peace talks between Ukraine and Russia, a key energy producer, and China’s increasing Covid outbreak, which could dampen demand in the world’s second largest economy.

Fed expected to raise rates for first time since 2018

The Federal Reserve’s two-day policy meeting ends on Wednesday, and the US central bank is largely expected to announce its first interest rate hike since December 2018 at 2 p.m. ET. 30 minutes later, Fed Chair Jerome Powell will hold a press conference. The fed funds target rate range has been between zero and 0.25 percent since early 2020, and most economists expect a quarter-point increase.

The Fed’s anticipated action Wednesday marks the next move in the Fed’s policy tightening cycle, which comes at a time when inflation in the United States is at its highest level in decades. Concerns about inflation are being exacerbated by the consequences from the Russia-Ukraine conflict. Investors will be paying attention to Powell’s comments on the conflict and how it’s affecting the Fed’s policy stance.

Additional rate hikes are expected at the Fed’s six remaining sessions in 2022, according to the policymaking arm of the central bank. By the end of the year, the consensus funds rate is expected to be 1.9 percent.

China pledges more economic support; stocks rebound

The Hang Seng index in Hong Kong had its biggest day since October 2008 on Wednesday, rising 9.1% following several days of severe selling. Alibaba and Tencent, both of which are listed in Hong Kong, have seen their Hong Kong-listed shares rise by more than 20%. The Shanghai composite and Shenzhen component, two important mainland Chinese indices, increased by 3.5 percent and 4%, respectively.
Investors reacted positively to two pieces of good news about China’s economy and publicly traded enterprises. Chinese officials committed to provide additional support for the world’s second-largest economy, particularly the key real estate sector, according to the official Xinhua News Agency. A collaboration plan for U.S.-listed Chinese stocks, which have been the focus of heavy regulatory scrutiny, has also made headway, according to the state news agency.

GameStop swings to a quarterly loss, shares drop in premarket

GameStop’s stock dropped nearly 9% in premarket trade on Friday, a day after the video game retailer reported an unexpected loss in the holiday quarter owing to supply chain issues. GameStop has been tight-lipped about future plans. CEO Matt Furlong said GameStop is still in the early stages of its turnaround on a post-earnings call. By the end of the second quarter, the business plans to offer a nonfungible token marketplace. It’s also relaunching an app, forming partnerships with PC gaming companies, and enticing new users to its rewards program.

Intel Plans $36 Billion in European Chip Plant Investments

To keep up with growing demand for semiconductors, Intel Corp. announced a $36 billion investment in chip production and research across Europe, including a new chip-making complex in Germany.

Intel CEO Pat Gelsinger announced on Tuesday that the city of Magdeburg, Germany, would be the site of one of the continent’s largest and most advanced semiconductor manufacturing facilities. On that facility, the corporation wants to pay a down payment of around $18.6 billion, or about €17 billion.

Intel has announced the second multibillion-dollar facility investment in 2022. It chose Ohio earlier this year to build a $20 billion chip-making facility that may grow to a $100 billion behemoth. As Mr. Gelsinger strives to gain a leg up on competitive competitors, Intel announced last year that it would grow in Arizona and New Mexico as well.

Mr. Gelsinger also stated that the corporation would invest up to €80 billion ($87.5 billion) in Europe over the long term, including research and development facilities in France, as well as manufacturing sites in Ireland, Italy, Poland, and Spain.

A New Meme-Stock Frenzy Led AMC to Gold Mine Stake

Day traders trying to profit from commodity price volatility set off a chain reaction that culminated in AMC Entertainment Holdings Inc.’s unique decision to invest in a gold-mining operation.

People familiar with the situation claimed Hycroft Mining Holding Corp., which holds substantial gold mines in Nevada, was on the edge of bankruptcy a few weeks ago before catching the attention of meme-stock traders online and then AMC CEO Adam Aron.

Mr. Aron welcomed the theater company’s purchase of 22 percent of Hycroft on Tuesday as a “bold diversification move,” after it was saved from possible bankruptcy by enthusiastic online investors last year.

Individual investors exploring social media for penny stocks that might be set to benefit from market volatility caused by Russia’s invasion of Ukraine brought Hycroft to AMC’s attention. According to persons familiar with the situation, Jason Mudrick, a hedge fund manager and one of Hycroft’s top investors, saw an opportunity for the company to obtain much-needed capital. It had been whittled down to barely $8 million in cash.

Stocks Finish Week With Strongest Gains Since 2020

As oil prices remained below recent highs and investors welcomed expressions of confidence in the US economy from the Federal Reserve, major US stock indices had their best week since November 2020.

Despite rising commodity prices and geopolitical concerns that have dragged on markets recently, the S&P 500, Dow Jones Industrial Average, and tech-heavy Nasdaq Composite all ended March with gains.

The S&P 500 finished the week with a gain of 6.2 percent, while the Dow Jones Industrial Average gained 5.5 percent. The Nasdaq Composite, which is heavily weighted in technology, rose 8.2 percent. As votes from the previous presidential election were still being tabulated, all three indices had their highest weekly performance since the week of Nov. 6, 2020.

Home Sales Fell in February Amid Tight Supply, Rising Mortgage Rates

In February, sales of previously owned homes fell as rising mortgage interest rates and a lack of available homes made it tough for purchasers to compete.

The National Association of Realtors said Friday that existing-home sales decreased 7.2 percent in February from the previous month to a seasonally adjusted annual rate of 6.02 million. Sales were down 2.4 percent in February compared to the same month last year.

The amount of residences offered for sale considerably outnumbers the demand for them. Buyers are keen to buy properties in case interest rates on mortgages soar further higher. Potential sellers are hesitant to become buyers in such a frantic market and are choosing not to list their houses, resulting in a near-record low inventory of homes on the market.

Discouraged by frequent bidding battles and escalating housing prices, some buyers are opting out of the market. Many homes continue to receive many bids and sell fast above their asking price.

According to the National Association of Realtors, the median existing-home price increased 15% from a year ago to $357,300 in February.

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