Mid-Week Market Minute 02.23.22

Stocks around the globe moved lower this week as investors assessed the impacts of the ongoing standoff between Russia and Ukraine. On Tuesday, President Biden said Russia had started to invade Ukraine and announced steps targeting Russia’s sale of sovereign debt abroad, its elites and a pair of banks. The sanctions, and others by U.S. allies, stopped short of sweeping measures. Instead of a sweeping package, the U.S. and its allies settled on a modest “first tranche” of penalties. A key question is whether increasing raw materials and energy costs will spur more aggressive central bank policy over the course of the year. Regardless of the geopolitical developments, we do not believe they pose any significant risk to U.S. earnings. Corporate earnings for the final quarter of 2021 have generally beaten expectations despite rising labor costs and supply chain constraints.

In economic news, purchasing managers flash data beat expectations this week. The flash Purchasing Managers’ Index (PMI) provides an early estimate of current private sector output by combining information obtained from surveys of around 1,000 manufacturing and service sector companies. The report tracks changes in variables such as new orders, stock levels, employment and prices across both manufacturing and services. Production also is tracked, defined as “production” for manufacturing and “output” for services. Consumer confidence edged lower in February as an increase in the current conditions component partly offset a decline in the expectations component. Moving forward, investors will be watching Thursday’s GDP report for insights into the health of the U.S. economy.

Source: GSAM, Daily Upside, JPM, FactSet

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