Stocks fell on Friday as risk sentiment worsened after Ukraine’s top diplomat said he didn’t see progress in negotiations between Russia and Ukraine, after Vladimir Putin reportedly had cited "certain positive developments" in the talks. The U.S. added vodka, caviar and diamonds to the list of banned Russian imports, and President Biden said he would seek to revoke the country’s preferential trade status, which would lead to higher tariffs on Russian goods. Inflation fears are intensifying, The U.S. consumer-price index popped 7.9% year-over-year in February, and with U.S. consumer sentiment sinking to its lowest since 2011 and inflation expectations for the year ahead rising to a 40-year high. Crude oil posted its first weekly loss since Russia's invasion, after hitting 14-year highs early in the week. The Dow Jones averaged notched its fifth consecutive week of losses, down 2%, while the S&P sank 2.9% and the Nasdaq slid 3.5%.
Top news last week:
- Amazon split and share buyback: Shares of Amazon (AMZN) jumped as much as 10% AH on Wednesday as the e-commerce giant announced a rare 20-for-1 stock split alongside a $10B buyback authorization. The last time the company split its shares was before the dot-com bubble in 1999, and since then, the stock has returned over 4,500%. While Amazon's decision doesn't affect any fundamentals, it does make the stock (or options contracts) more affordable for retail investors or those that don't want such a holding to be a large portion of their portfolios. A lower price can also mean the stock will be eligible for inclusion in the price-weighted Dow Jones Industrial Average. Amazon shareholders of record as of May 27 will have 19 additional shares for every one share in June (with trading expected to begin on a split-adjusted basis on June 6). AMZN shares have recently lagged behind other tech companies as the pandemic surge in online shopping and cloud computing eased over the past few months. After touching a record high of $3,773 in November, the stock fell back 26% to $2,785 (before the split was announced). : As mentioned above, Amazon's board of directors also approved a $10B buyback authorization, marking the largest share repurchase plan in the company's history. It replaces the repurchase approval of $5B that was established in 2016, though only $2.12B was spent on that effort thus far. Amazon didn't buy back any stock in 2019, 2020 or 2021, but has repurchased 500K shares for $1.3B in 2022.
- Shipping and supply chain stocks are surging: The global supply chain mess has been one of the biggest business stories of 2021. The pandemic has caused disruptions to the supply chains of many industries, hurting companies and consumers. The war in Ukraine has thrown global trade into more disarray. The pandemic and the ongoing Conflict has exposed the need for much more robust supply chains and investors are taking note of that. Some shipping stocks have been showing extraordinary results during the last week, while most of the stock market is taking a dive. Let’s take Navios Maritime Partners (NMM) for example: The stock is up almost 17% in the last week alone. Danaos Corp. (DAC) , a Greece-based company that owns a fleet of large-size container ships, has also surged, and is up 8% during the week. Another winner has been ZIM Integrated Shipping Services Ltd. (ZIM) an Israel-based provider of seaborne transportation and logistics services, which is up almost 10% during the last week. One other stocks from this industry that we have to also mention is Golden Ocean Group (GOGL) – which is up 22% YTD.
- Delisting fears: Chinese stocks listed in the U.S. had a bad day on Thursday, as the SEC named five companies from China that could be delisted for failing to abide by American accounting regulations. YumChina Holdings (YUMC), BeiGene (BGNE), Zai Lab (ZLAB), ACM Research (ACMR) and Hutchmed (HCM) have been cited for not adhering to the Holding Foreign Companies Accountability Act, which became law in December 2020. That statute gives the SEC the power to delist firms if they fail to allow U.S. regulators to review their audits for three years in a row. It's not the first time the SEC has warned companies that their shares are at risk of being delisted, but the reaction was swift across Wall Street. The selloff spread to the ADRs of Chinese internet players like JD.com (JD), Alibaba (BABA) and Baidu (BIDU), leading the sector to suffer their worst selloff since 2008. The Invesco Golden Dragon China Portfolio ETF (PGJ), which is based on the Nasdaq Golden Dragon China, even plunged 10% to its worse level since 2013. "Investors recently have been nervous from many regulatory uncertainties in China, geopolitical risks involving China/U.S. and multiple SEC-related inquiries involving Chinese stocks, all of which have increased uncertainty on China stocks,” said Jefferies analyst Michael Yee.
The Calendar
The main event for investors next week will be the monetary policy decision from the Federal Reserve's interest rate-setting committee on Wednesday afternoon. Officials are expected to raise the central bank's benchmark interest rate target range by a quarter of a percentage point, to 0.25% to 0.50%. It would be the first increase from the Fed since 2018.
Economic data out next week will include the U.S. Bureau of Labor Statistics' producer price index for February on Tuesday. Wholesale prices are expected to have soared 10% year over year. Other February data releases include the Census Bureau's retail sales on Wednesday and the Conference Board's leading economic index on Friday. There will also be housing market data on Wednesday and Friday.
Earnings:
Monday, March 14: Vail Resorts (MTN).
Tuesday, March 15: Caleres (CAL) and SentinelOne Inc (S).
Wednesday, March 16: Jabil (JBL), Lennar (LEN), Williams-Sonoma (WSM) and ZTO Express (ZTO).
Thursday, March 17: Dollar General (DG), FedEx (FDX), GameStop (GME), Accenture Plc (ACN) and Hut 8 Mining Corp (HUT).
Friday, March 18: On Holding (ONON).
