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Daily Market Report | March 24, 2022

US FINANCIAL MARKET

Stocks Edge Higher After Wednesday’s Selloff – Wall Street Journal, 3/24/2022

  • U.S. stocks inched higher, putting Wall Street indexes on course to recoup some of Wednesday’s losses, while oil prices hovered near recent highs.
  • The S&P 500 rose 0.3% in early trading Thursday, a day after slumping 1.2%.
  • The tech-focused Nasdaq Composite Index rose 0.2% and the Dow Jones Industrial Average gained 0.2%.
  • Stocks have struggled this year amid rising inflation, mixed economic signals, the war in Ukraine, and the continuing disruptions from the pandemic.
  • The S&P 500 is down about 6% year-to-date, and the Nasdaq, down about 11%, is in its longest bear market since 2008.
  • That slump, however, comes on the back of a long rally.
  • Wednesday marked the two-year anniversary of U.S. stocks’ pandemic lows.
  • Since then, the S&P 500 and Nasdaq have doubled, while the Dow is up nearly 90%.
  • Among individual stocks, shares of Nikola rose 12% after the company confirmed that production has begun on its electric commercial truck, the Tre.
  • Uber was up 3.3% after saying it would list all New York City taxis on its app.
  • Russia’s stock market jumped in its first limited trading session since the West unveiled punishing sanctions nearly a month ago. The benchmark MOEX index added about 4%.
  • In bond markets, the yield on the benchmark 10-year Treasury note ticked up to 2.367% from 2.320% Wednesday.
  • Overseas, the pan-continental Stoxx Europe 600 was down 0.2%.
  • Major indexes in Asia closed with mixed performance.
  • China’s Shanghai Composite fell 0.6%, and Hong Kong’s Hang Seng declined 0.9%. Japan’s Nikkei 225 added almost 0.3%.

Moderna raises full-year COVID vaccine sales forecast to $21 billion – Reuters, 3/24/2022

  • Moderna on Thursday raised its full-year forecast for sales of its COVID-19 vaccine to roughly $21 billion from $19 billion.
  • The company in February forecast sales of $19 billion from its signed contracts, and option for $3 billion in additional purchases.
  • Moderna on Thursday forecast additional purchases of roughly $500 million.

Nikola Jumps as Analysts Point to Progress on Electric Trucks – Bloomberg, 3/24/2022

  • Shares of embattled electric big rig maker Nikola surged after the company started production of revenue-generating trucks and showed it’s making progress on hydrogen infrastructure.
  • Nikola revealed the milestones in a presentation to Wall Street analysts late Wednesday.
  • On Thursday, the shares rose as much as 19%, their biggest intraday gain since Dec. 23.
  • Chief Executive Officer Mark Russell said Nikola’s margin outlook is conservative and the company will have the ability to raise prices on battery-electric semis above the current $300,000 sticker prices.
  • Nikola has forecast gross margins this year will be in the range of negative 60% to negative 75% before turning positive next year. The company expects margins could be as high as 20% in 2025.

Nickel Turmoil Is Back as Prices Spike 15% Again to Hit Limit – Bloomberg, 3/24/2022

  • Nickel surged by the 15% exchange limit for a second day in London, putting the spotlight back on bearish position holders just two weeks since the market was roiled by an historic short squeeze.
  • Nickel futures remained locked at the price limit by late morning on the London Metal Exchange, as the latest spike extends a period of unprecedented turmoil for the market.
  • Prices soared over 250% over two trading sessions in early March during the short squeeze centered on China’s Tsingshan Holding Group, before the market was suspended.
  • The latest surge comes after trading had only just restarted in earnest this week, with lower prices drawing in buyers following four days of limit-down moves when the market reopened from the week-long suspension.

Fertilizer Prices Surge as Ukraine War Cuts Supply, Leaving Farmers Shocked – Wall Street Journal, 3/24/2022

  • Fertilizer prices were already high before the war. They have now reached record levels amid a precipitous drop in Russian supply, according to CRU Group, which analyzes commodity markets.
  • At the same time, more-expensive natural gas, another Russian export and a crucial ingredient in fertilizer-making, has led European fertilizer factories to scale back production.
  • The result is that fertilizer is about three to four times costlier now than in 2020, with far-reaching consequences for farmer incomes, agricultural yields and food prices.
  • Smaller harvests will hit developing countries the hardest, forcing their cash-strapped governments to import large quantities of staples such as wheat at high prices, agricultural experts say.
  • Global food prices in February touched their highest point since the United Nations Food and Agriculture Organization began collecting monthly data three decades ago.
  • Food insecurity is likely to worsen. The Global Network Against Food Crises, an alliance of humanitarian and development groups, estimates that by last September, 161 million people across 42 nations in 2021 faced acute malnutrition or were forced to sell assets or take other desperate measures to procure food—up 19% from the start of the year.

Former Boeing Pilot Found Not Guilty in 737 MAX Criminal Trial – Wall Street Journal, 3/24/2022

  • A jury found a former Boeing pilot not guilty of deceiving air-safety regulators about a 737 MAX flight-control system later blamed for two fatal crashes.
  • The decision in the four-day trial in Fort Worth was reached after less than two hours of deliberation and acquitted Mark Forkner on all four counts of wire fraud.
  • Mr. Forkner was accused of misleading a training official at the Federal Aviation Administration about an automated cockpit feature to reduce how much training pilots would need to fly the plane, thus making the jet more attractive to airlines.
  • Mr. Forkner has been the only person charged in relation to the crashes, seen as part of the Justice Department’s effort to hold individuals accountable for their roles in corporate misdeeds.
  • Mr. Forkner’s attorneys had argued that federal prosecutors targeted him as a scapegoat for the accidents, which claimed 346 lives. They noted that Mr.
  • Forkner wasn’t an engineer and that many others were involved in the flight-control system’s design and certification.

Uber Reaches Deal to List All New York City Taxis on Its App – Wall Street Journal, 3/24/2022

  • Uber Technologies is becoming friends with a former foe.
  • The company has reached an agreement to list all New York City taxis on its app, an alliance that could ease the ride-hailing giant’s driver shortage and temper high fares while directing more business to cabdrivers, whose livelihoods were affected by the emergence of car-sharing apps and the pandemic.
  • As part of the deal, the New York City Taxi and Limousine Commission’s licensed technology partners will integrate their taxi-hailing apps’ software with Uber’s.
  • Those apps—run by Creative Mobile Technologies and Curb Mobility—are used by the city’s roughly 14,000 taxis, according to Uber.
  • The two companies enable credit-card payments in taxis and also run the screens that display the weather, news and ads to riders.

USPS to buy 50,000 delivery vehicles in $2.98 billion initial order – Reuters, 3/24/2022

  • The U.S. Postal Service said Thursday it placed an initial $2.98 billion order for 50,000 next-generation delivery vehicles from Oshkosh and will double its initial planned EV purchases.
  • U.S. Postmaster Louis DeJoy said that based on USPS’s ongoing reform efforts and “our improving outlook, we have determined that increasing our initial electric vehicle purchase from 5,000 to 10,019 makes good sense from an operational and financial perspective.”
  • In February last year, the USPS announced an initial $482 million contract for Oshkosh and said it could order up to 165,000 vehicles over 10 years in a deal that could be worth $6 billion or more.
  • USPS said it expects the vehicles will begin appearing on carrier routes in late 2023.

US ECONOMY & POLITICS

U.S. Business Activity Rebounds to Eight-Month High, Costs Rise – Bloomberg, 3/24/2022

  • U.S. business activity advanced to an eight-month high in early March as fewer Covid-19 restrictions and less severe supply chain disruptions supported demand and production.
  • The S&P Global flash U.S. composite purchasing managers index, formerly known as the IHS Markit PMI, increased 2.6 points to 58.5, the group reported Thursday.
  • The report also showed a measure of input prices accelerated to a near-record 76.8, further fanning inflationary pressures. Selling price inflation eased slightly in the month, though remains elevated.
  • The group’s manufacturing index rose to a six-month high in March, reflecting stronger growth in output, new orders and employment. Meantime, delivery times lengthened at the slowest rate since January 2021.
  • The gauge of services activity advanced to the strongest level since July, driven by a sharp increase in new business.
  • Robust demand at both manufacturers and service providers helped drive the overall measure of backlogs to the highest in data back to 2009.

U.S. Jobless Claims Fall to 187,000, Lowest Level Since 1969 – Wall Street Journal, 3/24/2022

  • New applications for unemployment benefits in the U.S. fell last week to a fresh half-century low as employers held on to their workers in the midst of a labor shortage.
  • Initial jobless claims, a proxy for layoffs, decreased by 28,000 to a seasonally adjusted 187,000 last week, the Labor Department said Thursday.
  • That was slightly below a level last seen in December, and the lowest level for initial claims in over 52 years, since September 1969.
  • The four-week average, which smooths out volatility in the numbers, decreased by 11,500 to 211,750.
  • Continuing claims, a measure of the total number of people on the unemployment rolls through regular state programs, moved down to 1.35 million for the week ended March 12 from 1.42 million the previous week.
  • That was the lowest level since January 1970, a time when the labor force was roughly half as large as it is today.
  • Continuing claims are reported with a one-week lag.

Fed’s Evans Says He’s ‘Open’ to Half-Point Interest-Rate Hike – Bloomberg, 3/24/2022

  • Federal Reserve Bank of Chicago President Charles Evans said he’s “comfortable” with raising interest rates by quarter percentage-point increments, while being “open” to a bigger 50 basis-point move if needed.
  • “We want to be careful, we want to be humble and nimble, and get to neutral before too long — maybe 50 helps, I’m open to that,” Evans said in answering a question after a Thursday speech to the Detroit Regional Chamber. “I would be comfortable with each meeting increasing by a quarter point.”
  • Investors have boosted bets on a half-point move at the FOMC’s May 3-4 meeting, after Chair Jerome Powell said Monday that the central bank was prepared to take such a step if necessary to control the hottest price pressures in four decades.

U.S. housing costs should play role in guiding Fed policy, Waller says – Reuters, 3/24/2022

  • The state of the U.S. housing market should help guide the Federal Reserve as it sets monetary policy and there appears no let-up in sight for higher home costs, Fed Governor Christopher Waller said on Thursday.
  • “With housing costs gaining an ever-larger weight in the inflation Americans experience, I will be looking even more closely at real estate to judge the appropriate stance of monetary policy,” Waller said in prepared remarks for a webinar on housing organized by Tel Aviv University and Rutgers University.
  • He noted that real estate comprises a big share of key inflation gauges as well as making a sizeable contribution to gross domestic product.
  • Measures of market rent have risen more than 6.5% over the past two years while house prices are up a cumulative 35% since the beginning of the COVID-19 pandemic, according to the Zillow Home Value Index.
  • Waller also said he hoped some pandemic-specific factors pushing up home prices and rents would ease in the next year or so, but cautioned that overall rising costs in the “red-hot” housing market are due to demand far exceeding supply and are not fueled by excessive leverage or easy lending.

U.S. Renews Tariff Exemptions for Some Chinese Imports – Wall Street Journal, 3/24/2022

  • The Biden administration said Wednesday that it will renew tariff waivers for 352 categories of goods from China after previously granted exemptions expired.
  • The items that will be exempted include certain kinds of bicycle parts, electric motors, machinery, chemicals, seafood and duffel bags.
  • The Biden administration conducted a review of 549 categories of goods for which waivers were sought, and on Wednesday the U.S. Trade Representative’s office said it had granted 352 exclusions while denying the rest.
  • Wednesday’s decision will have a relatively small impact on the tariffs overall. The tariffs imposed in 2018 and 2019 covered more than $350 billion a year worth of trade, and companies had filed more than 53,000 requests for tariff relief.

U.S. Hits Russian Lawmakers, Defense Sector With New Sanctions – Bloomberg, 3/24/2022

  • The U.S. announced a new package of sanctions on Russian elites, lawmakers and defense companies, punishments designed to ramp up pressure on Moscow over its invasion of Ukraine.
  • The measures announced Thursday during summit meetings between President Joe Biden and NATO, as well as the Group of Seven, will be followed by others to reduce Europe’s reliance on Russian oil and gas — the lifeblood of the nation’s economy, according to senior administration officials.
  • The U.S. will impose full blocking sanctions on more than 400 individuals and entities, including the Duma, Russia’s lower house of parliament, and 328 of its members, more than a dozen Russian elites and 48 Russian defense companies.
  • Among the defense companies being sanctioned are Russian Helicopters, Tactical Missiles Corporation, High Precision Systems, NPK Tekhmash OAO and Kronshtadt, according to the White House.
  • An agreement with European Union countries to reduce their dependence on Russian energy sources is expected to be announced Friday, according to a senior administration official, who declined to detail the measures.

EUROPE & WORLD

World Economy Set to Slow on War’s ‘Strong Headwinds,’ UN Says – Bloomberg, 3/24/2022

  • Russia’s invasion of Ukraine will act as a drag on the world economy, with developing countries at particular risk, the United Nations warned.
  • Global growth will probably ease to 2.5% in 2022 following last year’s 5.6% surge, the UN Conference on Trade and Development said Thursday in a report.
  • UNCTAD sees a deep recession in Russia and “significant” slowdowns across Western Europe and most of Asia.
  • While soaring food and fuel prices will increase hunger and hardship for people in poorer nations, everyone will ultimately experience reduced purchasing power, it said.
  • Poorer nations may soon face a perfect storm of slowing global demand, interest-rate hikes in advanced economies and high levels of pandemic-era debt that risk a “downward spiral of insolvency, recession and arrested development,” according to the report.

Euro zone March business growth strong but outlook darkens -PMI – Reuters, 3/24/2022

  • Euro zone business growth was stronger than expected this month, a survey showed on Thursday, although prices rose at a record pace, likely adding to pressure on the European Central Bank to raise interest rates.
  • S&P Global’s Flash Composite Purchasing Managers’ Index, seen as a good gauge of overall economic health, slipped to 54.5 in March from 55.5 in February although it was comfortably above the median 53.9 forecast in a Reuters poll.
  • A PMI covering the bloc’s dominant service industry fell to 54.8 this month from 55.5 but was ahead of the Reuters poll estimate for 54.2.
  • The manufacturing PMI dropped to 57.0 from 58.2 but was ahead of expectations for 56.0.
  • The output prices index jumped to 65.7 from 62.3 suggesting inflation, already a record 5.8% in February, has further to climb.
  • The factory future output index plummeted to 53.8 from 68.5, its lowest reading since May 2020 – not long after the coronavirus pandemic began.
  • Activity in Germany, Europe’s largest economy, dipped this month as output price inflation hit a new record high and the war in Ukraine impacted demand as well as supply chains, earlier data showed.
  • But French business activity accelerated unexpectedly to an eight-month high as easier COVID restrictions boosted the service sector and eclipsed concerns about the Ukraine crisis’ impact on manufacturing.
  • In Britain, outside the common currency area, the private-sector services PMI hit its highest in nine months but manufacturing output was reported at its lowest in five months.

Russian Stock Market Jumps With Foreign Investors Blocked From Selling – Wall Street Journal, 3/24/2022

  • Russia’s stock market jumped in its first, limited trading session since the West unveiled punishing sanctions nearly a month ago, but the rally was overshadowed by government moves to prevent foreign investors from selling shares.
  • The benchmark MOEX index rose around 4%.
  • Only 33 shares out of 50 on the index were allowed to trade in the shortened session.
  • Russian energy giant Gazprom PJSC rose 13%, while its peer Lukoil PJSC rose 12%.
  • Russian bank stocks were mixed despite being the target of sanctions. VTB Bank PJSC fell 5.5%.
  • Sberbank Russia PJSC rose 3.9%.
  • The resumption of trading is unlikely to be interpreted as a sign that all is well with the Russian economy.
  • To prevent a steep selloff, Russia’s central bank banned short selling, where investors bet that a stock’s value will decline, and blocked foreigners, who make up a huge chunk of the market, from selling their shares.
  • The Kremlin also directed a Russian sovereign-wealth fund to buy around $10 billion in shares.

Factmonster – TODAY in HISTORY

  • Queen Elizabeth I died at age 69 after ruling England for more than 40 years. 1603
  • Robert Koch announced the discovery of the tuberculosis bacillus. 1882
  • In one of worst oil spills in recent history, the tanker, Exxon Valdez, ran aground and released 240,000 barrels of oil into Prince William Sound. 1989
  • NATO begins launching air strikes in an attempt to force Serbia to cease hostilities against ethnic Albanians in Kosovo. 1999

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