Mid-day: Anxious mood in front of long weekend

The S&P 500 is trading at session lows with a 1.0% decline, as risk sentiment remains pressured by geopolitical uncertainty, disappointing earnings reactions in growth stocks, and the potentially hawkish path for monetary policy.

The Nasdaq Composite is down 1.5%, the Dow Jones Industrial Average is down 0.8%, and the Russell 2000 is down 0.8%.

All 11 S&P 500 sectors are trading lower with losses ranging from 0.3% (consumer staples) to 1.4% (information technology and consumer discretionary). The Philadelphia Semiconductor Index is a weak spot with a 2.1% decline.

While Russia and the U.S. have a tentative meeting next week should Russia not invade Ukraine, the fact that there’s a three-day weekend for the market has kept buyers sidelined in an anxious mood. U.S. officials, according to The Wall Street Journal , say the prospects for averting war appear very dim.

In addition, the growth stocks just can’t catch a break. Roku ( ROKU 107.94, -36.91, -25.5%), DraftKings ( DKNG 18.19, -3.87, -17.6%), and Redfin ( RDFN 21.53, -7.14, -24.9%) are showing material losses following their earnings report and/or guidance while Shake Shack ( SHAK 71.10, -4.08, -5.4%) is down modestly in comparison.

Separately, the Fedspeak continues to ramp up with the central bank’s next policy meeting less than a month away.

Today, New York Fed President Williams (voting FOMC member) said he supports steadily raising rates, and Cleveland Fed President Mester (FOMC voter) said she supports a rate hike in March, as well as a faster removal of accommodation if inflation doesn’t moderate as expected. Fed Vice Chair nominee Brainard (FOMC voter) will speak at 1:30 p.m. ET.

Elsewhere, the Treasury market continues to display some safe-haven positioning. The 10-yr yield is down five basis points to 1.92%, extending its two-day decline to 13 basis points. The 2-yr yield is down two basis points to 1.45%. The U.S. Dollar Index is up 0.3% to 96.11.

Reviewing today’s economic data:

  • Existing home sales increased 6.7% m/m in January to a seasonally adjusted annual rate of 6.50 million (Briefing.com consensus 6.08 million). Total sales in January were down 2.3% from a year ago.
  • The key takeaway from the report is the push to buy existing homes in January as mortgage rates increased – and were expected to increase further. That left unsold inventory at a record low, which is going to keep price pressures elevated and prospective buyers, particularly first-time buyers, facing an affordability pinch in the face of such lean supply for lower-priced homes and higher mortgage rates.
  • The Conference Board’s Leading Economic Index decreased 0.3% m/m in January (Briefing.com consensus +0.2%) following a revised 0.7% increase (from 0.8%) in December.