Technology stocks dragged down the equity market ahead of Friday's jobs report as traders weighed the economic impacts of the war in Ukraine. The rally in oil eased, with crude experiencing an extraordinary run of volatility.
The S&P 500 erased gains, while the tech-heavy Nasdaq 100 underperformed major benchmarks as megacaps Tesla Inc. and Amazon.com Inc. sank at least 2.7%. West Texas Intermediate topped $116 before pulling back. Zinc reached its highest since 2007 and aluminum jumped to a record as industrial metals extended a surge fueled by trade turmoil and the increasing economic isolation of Russia.
Traders awaited the government's employment report, which is currently forecast to show the U.S. added 415,000 jobs in February. Rapid wage growth in the U.S. likely isn't retreating any time soon. Along with soaring commodities prices since Russia's invasion of Ukraine, high labor costs are yet another factor the Federal Reserve will have to contend with as it prepares to raise interest rates to tamp down inflation.
Fed Chair Jerome Powell said the surge in energy prices is likely to spill into inflation and if that shift proved to be lasting, it could put upward pressure at the "margin" to longer-term expectations that the central bank wants to stop creeping up. He also noted the conflict in Ukraine could hit sentiment, harming investment spending.
President Joe Biden's administration said it would sanction eight wealthy Russians and their families and impose visa restrictions on 19 others and 47 of their family, as the U.S. and its allies seek to raise pressure on the elites around President Vladimir Putin in response to the invasion of Ukraine.
Investors dumped risk assets during Russia's invasion of Ukraine but they found a haven in junk. U.S. high-yield corporate bonds rallied over the last week, thrashing investment-grade, which is much more susceptible to rising rates. Strategists expect the debt to continue to do well, even as higher-rated bonds sell off.
Treasuries reached "extreme overbought territory" prior to Wednesday's rebound in yields, according to JPMorgan Chase & Co. strategists. On a technical basis, the bank's strategists still view the bear market as intact and expect the 10-year yield to exceed 2% in the months ahead.
BUSINESS REPORT