Dow books fifth straight week of losses as Biden says allies trying to avoid World War III

How did stock benchmarks perform?

• The S&P 500 index
  SPX,
  -1.30%
  fell 55.21 points, or 1.3%, to close at 4,204.31, with losses led by the communication services
  SP500.50,
  -1.88%,
  information technology and consumer discretionary sectors.

• The Dow Jones Industrial Average
  DJIA,
  -0.69%
  slid 229.88 points, or 0.7%, to end at 32,944.19, giving up modest gains earlier in the session.

• The Nasdaq Composite Index
  COMP,
  -2.18%
  dropped 286.15 points, or 2.2%, to finish at 12,843.81.

On Thursday, the Dow industrials closed down 112.18 points, or 0.3%, to 33,174.07. The S&P 500 dropped 0.4% to 4,259.52, and the Nasdaq Composite fell 0.9% to 13,129.96.

For the week, the S&P 500 lost 2.9%, while the Dow slid 2% and the Nasdaq dropped 3.5%. The Dow has seen five straight weeks of losses, its longest losing streak since the stretch ending May 31, 2019, while the S&P 500 and the Nasdaq each booked a second consecutive week of declines, according to Dow Jones Market Data.

What drove markets?

U.S. stocks sank Friday as investors remained focused on headlines tied to Russia’s ongoing invasion of Ukraine that began more than two weeks ago.

Biden called for an end of normal trade relations for Russia over its invasion of Ukraine and acknowledged the economic hardship the world will endure as it aims to isolate Russia by revoking its most-favored nation trade status, which the president says will make it even harder for Moscow to do business. Biden said Western nations were showing restraint to avoid starting World War III.

Stock-index futures spiked overnight after President Vladimir Putin told his Belarusian counterpart, Alexander Lukashenko, that there were “positive” shifts in Russian talks with Ukraine, according to a meeting transcript provided by the Kremlin and reported by Russian news agency Interfax. However, Ukraine’s foreign minister, Dmytro Kuleba, said he didn’t see any progress in Russian-Ukrainian talks, in an interview with Bloomberg. 

Referring to Putin’s comment, “it’s really hard to put much stock in that,” said Yung-Yu Ma, chief investment strategist at BMO Wealth Management, in a phone interview Friday “He also said he wasn’t going to invade Ukraine.” 

Putin’s upbeat comments came as Russian forces launched new strikes on airports in western cities on Friday, and Kyiv continued to brace for an onslaught.

This morning the market appeared to be “trying to latch on to anything” that might point to “a resolution of some of the acute fighting that’s taking place,” said Ma. But that still seems “a ways off” considering events on the ground, he said.

Major U.S. indexes suffered another week of losses, as investors grappled with the continuing Russia-Ukraine war. Technology stocks in particular have suffered as bond yields have climbed steadily this week, suggesting that worries about inflation and coming central bank interest-rate increases hold a greater sway with markets than the likely impact of the Ukraine war.

The Federal Reserve will hold its first policy meeting since the conflict began next week, with analysts widely expecting a rate increase of around 25 basis points, amid mounting fears that the central bank may push the economy into a recession as it combats inflation pressures.

“Before the Russia invasion of Ukraine some market pricing was suggesting we might see 7 rate rises this year, and while some are suggesting that might not happen now, there is an argument that it might be the lesser of two evils,” wrote Michael Hewson, chief market analyst at CMC Markets, in a daily note.

“The transitory (inflation) playbook seems so last year now with the Fed having to balance the risks of tightening too quickly and tipping the economy into recession or allowing inflation to do it for them by letting it rip,” he wrote.   

Goldman Sachs has cut its U.S. economic growth forecast, citing the effects of higher oil prices and the conflict on European soil. West Texas Intermediate crude for April delivery rose 3.1% Friday to settle at $109.33 a barrel.

In U.S. economic reports, data from the University of Michigan consumer sentiment survey showed a fall to an initial March reading of 59.7 from February’s level of 62.8. It’s “reflective of how much inflation is weighing on consumers,” with the increased cost of living starting to strain budgets, according to BMO’s Ma.

The consumer sentiment survey showed expectations for inflation over the next year rose to 5.4%, from February’s expectation of 4.9%, marking the highest level since 1981. Inflation expectations over five years held steady at 3%. The findings come after consumer price data released Thursday showed U.S. February consumer prices rose to 7.9%, a 40-year high, and some see that worsening due to the Russia-Ukraine war.

“There’s been a lot of flux between, is it going to be a protracted ground conflict or is it going to be a quick resolution?” said Michelle Cluver, portfolio strategist at Global X, in a phone interview Friday.  “It feels a lot like the market each day is trying to assess which way it’s going to lead.”

Which companies were in focus?

• Shares of DocuSign Inc.
  DOCU,
  -20.10%
  tumbled 20.1% after the online-signature company’s annual guidance disappointed late Thursday.

• Rivian Automotive Inc. shares
  RIVN,
  -7.56%
  fell 7.6% after the electric-truck maker said it lost more than $2 billion in the fourth quarter, amid continued supply-chain disruptions.

How did other assets fare?

• The yield on the 10-year Treasury note
  TMUBMUSD10Y,
  1.997%
  was little changed Friday at 2%, but it rose 28.2 basis points this week for the largest weekly gain since September 2019 based on levels at 3 pm Eastern Time, according to Dow Jones Market Data. Yields and debt prices move opposite each other.

• The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.6% for a weekly gain of about 0.5%.

• Gold futures for April delivery 
  GC00,
  +0.37%

  GCJ22,
  +0.37%
  fell 0.8% to settle at $1,985 an ounce.

• Bitcoin 
  BTCUSD,
  +0.11%
  was down 1.8% at $38,593.

• In European equities, the Stoxx Europe 600 
  SXXP,
  +0.95%
  rose 1%, and posted a 2.2% weekly rise; while London’s FTSE 100 UKX gained 0.8% and notched a 2.4% weekly rise.

• In Asia, the Shanghai Composite SHCOMP rose 0.4% but sank 4% on the week; the Hang Seng Index HSI fell 1.6%, contributing to a 6.2% decline for the week, and Japan’s Nikkei 225 NIK lost 2% and booked a 3.2% weekly fall.

—Barbara Kollmeyer contributed to this report.