Stock Market Today: Dow Dashes to Best Gain Since November 2020
Russia reportedly is opening the door to negotiations, sparking a broad-based rally Friday that saw all 11 sectors finish well in the green.
News about the conflict in Eastern Europe was contradictory as the trading week came to a close, but markets surged as Wall Street grasped for good news.
On Friday, Russian troops reportedly were closing in on the Ukrainian capital of Kyiv. Yet on the same day, the Kremlin said Russian President Vladimir Putin had agreed to send a delegation to the Belarusian capital of Minsk to negotiate with Ukraine.
Chinese President Xi Jinping reportedly also gave a nod toward a peaceful resolution, saying "China supports Russia and Ukraine to resolve issues through negotiations" after a conversation with Putin, according to state-owned CCTV.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
But some of Friday's bullishness might also have come from changing expectations for Federal Reserve action this year.
"Wall Street anticipates central bank reluctance to go overly aggressive with tightening monetary policy, so they could provide a cushion for a growth hit that will stem the Russia-Ukraine developments," says Edward Moya, senior market strategist at currency data provider OANDA.
Back on the homefront, America's core personal consumption expenditures price index showed consumer spending up 5.2% in January, according to the Commerce Department. That was slightly better than expectations for 5.1%.
"The strong consumer numbers come at a time when many economists were worried about an economy that was weaning itself of government stimulus in the latter part of 2021, and whether the consumer would be able to carry the torch in 2022," says Peter Essele, head of portfolio management for Commonwealth Financial Network.
The Dow Jones Industrial Average – led by advances in Johnson & Johnson (JNJ, +5.0%), 3M (MMM, +4.7%) and Procter & Gamble (PG, +4.3%) – jumped 2.5% to 34,058, its best performance since a roughly 3% gain on Nov. 9, 2020. The S&P 500 (+2.2% to 4,384) and Nasdaq Composite (+1.6% to 13,694) also posted sizable gains, putting both indexes into positive territory for the week.
Still, the impressive market comeback of the past couple of days doesn't mean the market is out of the woods yet.
Yesterday, the CBOE Volatility Index, or VIX, crossed above 30 amid Russia’s invasion of Ukraine. “VIX above 30 indicates that investors are unusually anxious about what comes next, and that they are hedging stock portfolios to protect against further declines,” say Michael Oyster and Steven Sears of asset-management firm Options Solutions. “Market fears have abated somewhat, with the CBOE VIX below 30, but as it remains near the highest 10% level of all time, the options market is hardly signaling an all-clear.”
Other news in the stock market today:
- The small-cap Russell 2000 popped 2.3% to 2,040.
- U.S. crude oil futures slumped 1.3% to finish at $91.59 per barrel, but still ended the week up 1.5%.
Gold futures shed 2% to settle at $1,887.60 an ounce, bringing its weekly decline to 0.6%. - Bitcoin continued clawing its way back to $40,000, rising 1.7% to $39,130.32. (Bitcoin trades 24 hours a day; prices reported here are as of 4 p.m.)
- Etsy (ETSY) stock soared 16.2% after the online marketplace reported top- and bottom-line beats in its fourth-quarter. For the three-month period, ETSY brought in earnings of $1.11 per share on $717 million. While the company did offer lower-than-expected current-quarter revenue and gross merchandise sales guidance, Chief Financial Officer Rachel Glaser said this was due to tough year-over-year pandemic-related comparisons. "ETSY is one of few names surviving the pandemic online bubble with initiatives to drive top line at core brand and the subs," says Needham analyst Anna Andreeva, who reiterated a Buy rating on the retail stock.
Foot Locker (FL) sat out today's broad-market rally, shedding 29.8% after earnings. In its fiscal third-quarter, the athletic apparel retailer reported adjusted earnings of $1.67 per share on $2.34 billion in revenue, higher than the $1.44 per share and $2.33 billion expected by analysts. However, FL also warned that revenue will likely be down between 4% and 6% and same-store sales will contract 8% to 10% in fiscal 2022. This is due in part to the company selling less products from Nike (NKE). "In Q4 '21 Nike represented 65% of vendor spend which FL plans to reduce to 55% moving forward," says CFRA Research analyst Zachary Warring (Hold). "We do not like the positioning of FL as companies shift to direct-to-consumer and they continue to have higher exposure to malls but see limited downside as FL currently trades at 6.0x 2023 EPS and a clean balance sheet."
Where Can Opportunists Put Money to Work?
In times of market crisis, some people look for protection, while others scout out opportunities.
Rhys Williams – chief strategist at Spouting Rock Asset Management and a former journalist at the Moscow office of The Sunday Times – has a dour outlook on the geopolitical situation:
"Putin seems to have made his choice, and it looks like he has settled on regime change," Williams said, adding that in the medium-term, he's not quite sure how business gets back to usual.
But there are some market implications for investors looking to buy on this dip.
"I think Big Tech will get a bid after a significant correction, as they have a lot of cash and consumer staples-like qualities. They also don't lose much business in Russia and the Ukraine relative to overall revenues," he says. These 12 stocks represent some of our best ideas in the broader sector, though specific industries such as cybersecurity are becoming a trendy pick.
Rhys also likes higher-dividend-yielding stocks, "as perhaps this caps interest rates for a while."
You can start with this nine-pack of stocks dishing out 5% or more in annual income – though more importantly, they haven't been selected only for their large headline yields. These picks broadly feature conservative payout ratios, stronger balance sheets and business models that generate predictable cash flow, meaning their dividends aren't just generous … they're sustainable over the long haul.
Get Kiplinger Today newsletter — free
Profit and prosper with the best of Kiplinger's advice on investing, taxes, retirement, personal finance and much more. Delivered daily. Enter your email in the box and click Sign Me Up.
With over a decade of experience writing about the stock market, Karee Venema is the senior investing editor at Kiplinger.com. She joined the publication in April 2021 after 10 years of working as an investing writer and columnist at Schaeffer's Investment Research. In her previous role, Karee focused primarily on options trading, as well as technical, fundamental and sentiment analysis.
-
Here's How To Get Organized And Work For Yourself
Whether you’re looking for a side gig or planning to start your own business, it has never been easier to strike out on your own. Here is our guide to navigating working for yourself.
By Laura Petrecca Published
-
How to Manage Risk With Diversification
"Don't put all your eggs in one basket" means different things to different investors. Here's how to manage your risk with portfolio diversification.
By Charles Lewis Sizemore, CFA Published
-
Stock Market Today: Muted Inflation Data Sparks Relief Rally
Encouraging news about the path of consumer prices sent risk assets soaring again.
By Dan Burrows Published
-
Stock Market Today: The Dow Adds 15 Points To End Its Losing Streak
Equity indexes opened higher but drifted lower as markets priced in new Fed forecasts.
By David Dittman Published
-
Stock Market Today: Dow Dives 1,123 Points After Fed
Market participants reacted predictably to a well-telegraphed hawkish turn by the Federal Reserve.
By David Dittman Published
-
Fed Sees Fewer Rate Cuts in 2025: What the Experts Are Saying
Federal Reserve The Federal Reserve cut interest rates as expected, but the future path of borrowing costs became more opaque.
By Dan Burrows Published
-
Stock Market Today: The Dow Slides Into Its First 9-Day Losing Streak Since 1978
A Santa Claus rally is on hold as markets wait for more information about monetary policy.
By David Dittman Published
-
Stock Market Today: Stocks Are Mixed Ahead of the Fed
Two of the three main equity indexes closed higher on the first day of the final Fed Week of 2024.
By David Dittman Published
-
Stock Market Today: Broadcom Earnings Boost the Nasdaq
Broadcom became the latest member of the $1 trillion market-cap club after its quarterly results, while RH also rallied on earnings.
By Karee Venema Published
-
Stock Market Today: Dow Logs Longest Losing Streak Since April
The November Producer Price Index showed that inflation remains a tough beast to tame.
By Karee Venema Published