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  • IMF board approves $15.6 bln loan package for Ukraine

    IMF board approves $15.6 bln loan package for Ukraine

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    The executive board of the International Monetary Fund on Friday approved a four-year $15.6 billion loan program for Ukraine, part of a broader $115 billion international support package to help the country meet its funding needs in the wake of Russia’s invasion.

    The decision clears the way for an immediate payment of about $2.7 billion to Kyiv, the Fund said in a statement.

    The Extended Fund Facility (EFF) loan is the first major financing program approved by the IMF for a country involved in a war. Ukraine’s previous $5-billion IMF program expired last year.

    “Russia’s invasion of Ukraine continues to have a devastating economic and social impact,” IMF First Deputy Managing Director Gita Gopinath said in a statement.

    Ukrainian President Volodymyr Zelenskiy welcomed the new funding.

    “It is an important help in our fight against Russian aggression,” he said on Twitter. “Together we support the Ukrainian economy. And we are moving forward to victory!”

    The agreement is expected to help unlock financing for Ukraine from international donors and partners, including the World Bank and other lenders.

    The $115 billion package includes the IMF loan, $80 billion in pledges and loans from other countries and $20 billion worth of debt relief commitments.

    “I welcome the IMF approval of a $15.6 billion economic program for Ukraine,” U.S. Treasury Secretary Janet Yellen said in a statement late Friday. “I commend Ukraine’s efforts to pursue broad-based structural reforms under the program despite Russia’s brutal and immoral war and strongly support the program’s measures aimed at securing economic and financial stability. The program’s policies and reforms will support economic growth, strengthen good governance and anti-corruption efforts, and set the foundation for longer-term reconstruction.”

    Some of Ukraine’s creditors, such as Canada, France, Germany, Japan, the UK and the US, supported the deal which required the IMF to change its rules by giving assurances that they would extend a debt-repayment standstill for the duration of the program.

    The Russian invasion, launched over a year ago, has devastated Ukraine’s economy and infrastructure, killing thousands of people and driving more than a third of a pre-war population of 40 million from their homes. 

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  • Dow rises more than 300 points after inflation report as Nasdaq heads for best quarter since 2020

    Dow rises more than 300 points after inflation report as Nasdaq heads for best quarter since 2020

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    U.S. stocks were climbing Friday afternoon following a softer-than-expected inflation report for February, while the Nasdaq Composite was on pace for its largest quarterly advance since 2020.

    How stocks are trading
    • The Dow Jones Industrial Average
      DJIA,
      +1.26%
      rose 340 points, or 1%, to 33,199.

    • The S&P 500
      SPX,
      +1.44%
      gained almost 47 points, or 1.2%, to nearly 4,098.

    • The Nasdaq Composite
      COMP,
      +1.74%
      advanced almost 173 points, or 1.4%, to 12,186.

    For the week, the Dow is on track to gain 3% while the S&P was on pace to rise 3.2% and the Nasdaq Composite was heading for a 3.1% increase, according to FactSet data, at last check.

    What’s driving markets

    U.S. stocks were up sharply Friday afternoon as investors weighed data showing signs of moderating inflation.

    “Core price pressures” eased in February, Barclays said in an economics research note Friday. “On balance, the easing in February PCE inflation was fairly broad-based across goods and services, barring housing.”

    The personal-consumption-expenditures, or PCE, price index increased 0.3% in February, with inflation slowing to 5% year over year from 5.3% in January, according to a report Friday from the Bureau of Economic Analysis.

    Core PCE, the Federal Reserve’s preferred inflation gauge that excludes energy and food prices, rose 0.3% last month for a year-over-year rate of 4.6%. That’s slightly lower than forecasts from economists polled by the Wall Street Journal and softened from the 4.7% increase seen over the 12 months through January.

    Read: Inflation softens in February, PCE finds, and gives ammo for Fed rate-hike pause

    While the Federal Reserve has been battling high inflation with interest rate hikes, futures traders are betting that rates have already peaked and that the Fed will likely reverse course and cut rates at least a couple of times before the end of the year, according to the CME’s FedWatch tool.

    The market is pricing in a “coin flip” as to whether the Fed raises its benchmark rate by a quarter percentage point at its May policy meeting, said Matt Stucky, senior portfolio manager at Northwestern Mutual Wealth Management Co., in a phone interview Friday.

    “We think we’re getting pretty close to the end” of the rate-hiking cycle, he said. Stucky expects the Fed may stop hiking once “cracks” start to form in the labor market, with job losses in “nonfarm payrolls.”

    Meanwhile, consumer spending edged up 0.2% in February while personal incomes rose 0.3%, according to a Bureau of Economic Analysis report Friday.

    “Incomes and spending are hanging in there and inflation’s cooling,” said Mike Skordeles, head of U.S. economics at Truist, in a phone interview Friday. “That has positive implications for markets” and the economy, he said.

    Stocks traded higher following the release of the final reading on U.S. consumer sentiment for March from the University of Michigan. While confidence ticked lower compared with earlier estimates, inflation expectations moderated.

    U.S. stocks have held up relatively well this quarter, shrugging off the Fed rate hikes and renewed recession fears. Since hitting its highest level of the year in early February, the S&P 500 has been trading in an increasingly narrow range, leaving analysts divided about where the market might be heading next.

    “We need to see what the overall economy does,” said Kim Caughey Forrest, founder and chief investment officer of Bokeh Capital Partners. “I think GDP matters, and if GDP holds up while inflation comes down, that could be good for stocks.”

    The Nasdaq Composite has risen around 16% since the start of the year, putting it on track for its best quarterly gain since the three months through June 2020, according to FactSet data, at last check. The technology -heavy Nasdaq jumped more than 30% in the second quarter of 2020 as stocks rebounded from the global market rout tied to COVID-19 that year.

    The S&P 500 and Dow were also track for quarterly gains in late afternoon trading.

    “The bond market is definitely more concerned about recession risks than stocks are,” said Skordeles, who is expecting a recession in the second half of the year. “They couldn’t be sending more different signals.”

    Read: Two-year Treasury yields on pace for biggest monthly drop since 2008 after bank turmoil

    New York Fed President John Williams said Friday in a speech at Housatonic Community College that stress in the U.S banking system will cause banks to tighten credit and probably lead to lower consumer spending.

    Companies in focus

    —Steve Goldstein contributed to this article.

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  • Vatican says Pope Francis will be discharged on Saturday from a Rome hospital

    Vatican says Pope Francis will be discharged on Saturday from a Rome hospital

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    ROME (AP) — Pope Francis is expected to be discharged on Saturday from the Rome hospital where he is being treated for bronchitis, the Vatican said.

    Vatican spokesman Matteo Bruni said in a written statement on Friday that the pope’s recovery has been “normal” and that he ate a pizza Thursday for dinner.

    Francis, 86, was hospitalized on Wednesday at Gemelli Polyclinic, where doctors said the pontiff was receiving antibiotics intravenously to treat his bronchitis.

    The hospitalization came four days before Palm Sunday, the start of Holy Week.

    Due to a chronic knee problem, Francis had already largely stopped celebrating Mass at major Catholic Church holy days but had continued to preside at the ceremonies and deliver homilies.

    Italian Cardinal Giovanni Battista Re said Friday that Francis might be discharged Saturday and would thus be able to preside over — but not celebrate — Holy Week ceremonies.

    “On the basis of the information I have, he’ll leave Gemelli tomorrow, so he’ll be able to preside over all the Holy Week rituals,” Italian news agency Adnkronos quoted the cardinal as saying.

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  • Donald Trump has been indicted. Could he still run for president?

    Donald Trump has been indicted. Could he still run for president?

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    Donald Trump was indicted by a Manhattan grand jury Thursday in a case involving hush-money payments to a porn star who said she’d had a sexual encounter with the former president. What will this mean for Trump’s plans to again seek the White House? As Trump presses ahead with his 2024 campaign, here are a few questions and answers about possible criminal charges from the Manhattan district attorney, Democrat Alvin Bragg, and their effects.

    Question: Can an indicted person run for president?

    Answer: Yes. There’s nothing in the Constitution preventing it. Article II, Section 1, of the Constitution doesn’t mention criminal records. The only requirements to run are being a natural-born citizen at least 35 years old and resident in the U.S. for 14 years.

    “ Not only can an indicted person run for president, but a convicted one can, too, legal experts say. ”

    Not only can an indicted person run for president, but a convicted one can, too, legal experts say. “There’s nothing in the Constitution disqualifying individuals convicted of crimes from running for or serving as president,” ABC News legal analyst Kate Shaw told the network.

    Were Trump to be convicted of a felony, however, he likely could not vote for himself — 48 states ban people with felony convictions from voting, according to advocacy group the Sentencing Project.

    From the archives (July 2020): Supreme Court deals setback to Florida felon voting rights

    Also see (May 2021): Florida’s DeSantis signs Republican voting bill that Democrats and critics call un-American; bill signing staged as ‘Fox & Friends’ exclusive

    Q.: What has Trump said about a possible indictment’s effect on his campaign?

    A.: “I wouldn’t even think about leaving,” he told reporters ahead of his speech at this year’s Conservative Political Action Conference. “Probably it will enhance my numbers.” Trump has said he did nothing wrong.

    Trump in mid-March said he could be arrested in the coming days, encouraged his supporters to protest and wrote on social media, “TAKE OUR NATION BACK!”

    Bragg, in response, told his staff that the office won’t be intimidated or deterred as it nears a decision on charging the former president.

    Q.: What have Trump’s rivals for the GOP nomination, or other Republican politicians, said about an indictment?

    A.: In a tweet Thursday, Florida Gov. Ron DeSantis, who is expected to announce his bid for the GOP presidential nomination, called the indictment “un-American” and accused the Manhattan D.A. of having a political agenda. DeSantis added that Florida would not cooperate in an extradition request.

    House Speaker Kevin McCarthy said “the House of Representatives will hold [Manhattan D.A.] Alvin Bragg and his unprecedented abuse of power to account,” while Rep. Jim Jordan, R-Ohio, who has called for a probe into the Manhattan D.A.’s investigation, tweeted a single word Thursday: “Outrageous.”

    Q.: What would a Trump arrest actually look like?

    A.: It’s standard for defendants arrested on felony charges to be handcuffed — but it’s unclear whether an exception would be made for Trump due to his status, the New York Times reported. The former president would likely be released on his own recognizance, the Times said, because an indictment likely would contain only nonviolent felony charges. But he would be fingerprinted and photographed.

    Q.: Is Bragg’s the only investigation Trump is facing?

    A.: No. Besides the Manhattan district attorney’s case, Trump is facing another in Fulton County, Ga., and two federal probes led by special prosecutor Jack Smith. The Georgia probe centers on efforts by Trump and his allies to overturn that state’s 2020 election result. Smith’s investigations concern Trump’s handling of classified material after he left office, and the ex-president’s involvement in the Jan. 6 attack on the U.S. Capitol.

    So Trump could be in for more charges depending on the results of those investigations.

    Q.: Could something else prevent Trump from being president?

    A.: The 14th Amendment bars anyone from public office who, “having previously taken an oath” to support the Constitution, “engaged in insurrection or rebellion” or gave “aid or comfort” to enemies of the U.S. Late last year, a group of 40 House Democrats introduced legislation to bar Trump from holding office, and invoked the 14th Amendment, with Rep. David Cicilline saying the ex-president “very clearly” engaged in an insurrection on Jan. 6, 2021. Trump has denied wrongdoing.

    Now read: Who is Alvin Bragg, the Manhattan DA who may be set to bring charges against Donald Trump?

    Read more: Fulton County grand jury reported hearing a previously unknown Trump phone call with a top Georgia official

    Also see: Here are the Republicans running for president — or seen as potential 2024 candidates

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  • Trump grand jury reportedly taking break for most of April

    Trump grand jury reportedly taking break for most of April

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    The Manhattan grand jury probing former President Donald Trump’s alleged role in a hush money payment to a porn star is scheduled to break for about a month, reports said Wednesday.

    Politico said the break is largely due to a previously scheduled hiatus, citing a person familiar with the proceedings.

    CNN reported that the grand jury is scheduled…

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  • Pence ordered to testify before grand jury about alleged Trump effort to undo 2020 presidential election

    Pence ordered to testify before grand jury about alleged Trump effort to undo 2020 presidential election

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    WASHINGTON (AP) — A federal judge has ruled that former Vice President Mike Pence will have to testify before a grand jury after he was subpoenaed by the special counsel investigating efforts by former President Donald Trump and his allies to overturn the results of the 2020 election.

    That’s according to two people familiar with the ruling, who spoke on condition of anonymity because it remains under seal.

    The…

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  • Jobless claims dip to 3-week low of 191,000 — labor market still very strong

    Jobless claims dip to 3-week low of 191,000 — labor market still very strong

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    The numbers: The number of Americans who applied for unemployment benefits last week slipped to a three-week low of 191,000, signaling little erosion in a strong U.S. labor market even as the economy faced fresh strains.

    New U.S. applications for benefits fell by 1,000 from 192,000 in the prior week, the government said Thursday. .

    The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels.

    Economists polled by The Wall Street Journal had forecast new claims to total 198,000 in the seven days ended March 18. The numbers are seasonally adjusted.

    Key details: Twenty-eight of the 53 U.S. states and territories that report jobless claims showed a decrease last week. Twenty-five posted an increase.

    Most of the changes were small except in Indiana.

    One potential red flag: The number of raw or actual claims — before seasonal adjustments — was much higher last week compared to the same week a year earlier. But so far there’s little sign of a trend.

    “Even the tens of thousands of recent [high-tech] layoffs have almost completely been absorbed by a powerful labor market that has plenty of expansion left in it,” contended Robert Frick, chief corporate economist at Navy Federal Credit Union.

    The number of people collecting unemployment benefits across the country, meanwhile, rose by 14,000 to 1.69 million in the week ended March 11. That number is reported with a one-week lag.

    These continuing claims are still low, but a gradual increase since last year suggests it’s taking longer for people who lose their jobs to find new ones.

    Big picture: Jobless benefit claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession. It’s still not flashing a red-light, or even a yellow one, as the economy comes under more duress.

    The Federal Reserve, for instance, just raised interest rates to a nearly 16-year high. And the failure of Silicon Valley Bank has put more stress on the U.S. financial system.

    Both of these actions could constrain the economy in the months ahead, curb hiring and potentially boost a low unemployment rate. If so, watch the trend in new jobless claims.

    Looking ahead: “Most companies are either still hiring or are holding onto their employees and seeking other ways to cut costs,” said chief economist Joshua Shapiro of MFR Inc.

    “This is consistent with our view that layoffs will rise less dramatically than normally might occur as companies do all they can to avoid shedding workers who have been incredibly difficult to recruit and retain.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    +0.23%
    and S&P 500
    SPX,
    +0.30%
    were set to open higher in Thursday trades. Stocks have been under pressure since the failure of SVB earlier this month.

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  • Turkey’s president says he will back Finland’s NATO bid

    Turkey’s president says he will back Finland’s NATO bid

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    President Recep Tayyip Erdoğan of Turkey said Friday that his government would move forward with ratifying Finland’s NATO application, paving the way for the country to join the military bloc ahead of Sweden.

    The breakthrough came as Finnish President Sauli Niinisto was in Ankara to meet with Erdoğan. Both Finland and Sweden applied to become NATO members 10 months ago in the wake of Russia’s invasion of Ukraine, abandoning decades of nonalignment.

    NATO requires the unanimous approval of its 30 existing members to expand, and Turkey and Hungary are the only countries that have not yet ratified the Nordic nations’ bids. The Turkish government accused both Sweden and Finland of being too soft on groups that it deems to be terror organizations, but it has more stridently expressed its reservations about Sweden.

    See: Nordic premiers sanguine about NATO membership despite threat to Sweden’s accession posed by Turkish leader Erdoğan

    Plus: Nordic premiers sanguine about NATO membership despite threat to Sweden’s accession posed by Turkish leader Erdoğan

    Also: Erdoğan suggests Turkey will not support Sweden’s bid to join NATO

    “When it comes to fulfilling its pledges in the trilateral memorandum of understanding, we have seen that Finland has taken authentic and concrete steps,” Erdoğan told a news conference in Ankara following his meeting with Niinisto.

    “This sensitivity for our country’s security and, based on the progress that has been made in the protocol for Finland’s accession to NATO, we have decided to initiate the ratification process in our parliament,” the Turkish president added.

    With Erdoğan’s agreement, Finland’s application can now go to the Turkish parliament, where the president’s party and its allies hold a majority. Ratification is expected before Turkey holds its presidential and parliamentary elections scheduled for May 14.

    Erdoğan suggested Wednesday that his country might take up Finland’s accession following Niinisto’s trip.

    Turkey, Finland and Sweden signed an agreement in June of last year to resolve differences over the Nordic states’ membership.

    The document included clauses addressing Ankara’s claims that Stockholm and Helsinki did not take seriously enough its concerns with those it considers terrorists, particularly supporters of Kurdish militants who have waged a 39-year insurgency in Turkey and people Ankara associates with a 2016 coup attempt.

    A series of separate demonstrations in Stockholm, including a protest by an anti-Islam activist who burned the Quran outside the Turkish Embassy, also angered Turkish officials.

    Hungarian Prime Minister Viktor Orbán and lawmakers have repeatedly promised to ratify the two countries’ NATO membership applications. But the country’s parliament has repeatedly postponed a ratification vote and hasn’t given a firm date on when the vote would take place.

    From the archives (March 2022): Hungary’s Orbán resists emotional appeal by Zelensky to provide weapons to Ukraine and enforce sanctions against Russia

    Also see (February 2022): Russian invasion of Ukraine appears to have alienated Putin’s few friends among the Western allies

    Plus (May 2022): ‘Orbánization’? CPAC convenes in Budapest as American right’s embrace of Hungarian autocrat Orbán’s ‘illiberal democracy’ model tightens

    Erdoğan on Wednesday suggested that his country may soon agree to Finland’s application to join NATO. Turkish officials previously said that Finland joining ahead of Sweden was a more likely outcome.

    Niinisto arrived in Turkey on Thursday and toured areas affected by a magnitude 7.8 earthquake that killed more than 52,000 people in Turkey and Syria last month.
    “I have known Erdogan for a long time. I am sure he has important messages,” Niinisto said Thursday while visiting Kahramanmaras, one of the provinces worst-hit by the Feb. 6 earthquake.

    See: Blinken tours devastation from Turkey quake, pledges $100 million more in aid

    Before leaving Helsinki, Niinisto said Turkish officials had requested his presence in Ankara to announce Turkey’s decision on the Finnish bid. He also stressed his support for Sweden’s swift admission and in a Twitter post said he had had a “good conversation” with Swedish Prime Minister Ulf Kristersson prior to his Turkey trip.
    Kristersson said Sweden hoped for “a rapid ratification process” after Turkey’s May 14 presidential and parliamentary elections.

    Read on: Senate panel in U.S. easily approves bids by Sweden, Finland to join NATO

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  • U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

    U.S. stocks end lower, Dow books back-to-back weekly losses as banking sector stress reemerges

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    U.S. stocks ended lower Friday as worries about banking-sector stability reemerged following a bankruptcy filing by SVB Financial Group and the release of data showing banks borrowed $165 billion from the Federal Reserve over the past week.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.19%
      fell 384.57 points, or 1.2%, to close at 31,861.98.

    • The S&P 500
      SPX,
      -1.10%
      dropped 43.64 points, or 1.1%, to finish at 3,916.64.

    • The Nasdaq Composite
      COMP,
      -0.74%
      slid 86.76 points, or 0.7%, to end at 11,630.51, snapping a four-day win streak.

    For the week, the Dow fell 0.1%, the S&P 500 gained 1.4% and the Nasdaq climbed 4.4%, according to Dow Jones Market Data. The Dow booked back-to-back weekly losses while the Nasdaq saw its biggest weekly percentage gain since January.

    What drove markets

    U.S. stocks fell Friday as worries about the banking sector persisted.

    “The markets are up and down all this week, and they’re moving typically in big amounts, because there really isn’t any consensus on how the strains in the banking system will play” into the economy, said Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, in a phone interview Friday. Investors are trying to get a sense for how quickly the economy may be slowing and whether the problems in the banking sector will lead to an “accelerated slowing,” he said.

    Concerns about the banking sector’s ability to withstand deposit flight reemerged Friday morning after SVB Financial Group
    SIVB,
    -60.41%
    announced it had filed for Chapter 11 bankruptcy protection. SVB is the holding company of Silicon Valley Bank , which was put into FDIC receivership last Friday.

    On Thursday, First Republic Bank announced that it would receive $30 billion of uninsured deposits from a group of large U.S. banks. JPMorgan Chase & Co., Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. were among the 11 banks that agreed to provide the deposits.

    Meanwhile, Federal Reserve data released Thursday afternoon in New York showed banks borrowed a combined $165 billion from the central bank. Most of the borrowing occurred via the Fed’s discount window. But a small amount was also tapped through the Fed’s new Bank Term Funding Program that allows bonds trading at a discount to be used as collateral, at par value. The fact that borrowing through the discount window has soared to a record high was adding to the market’s concerns about the banking sector, analysts said.

    See: Banks have borrowed $165 billion from the Fed in past week after SVB failure

    First Republic Bank
    FRC,
    -32.80%
    shares plunged 32.8% Friday, while Credit Suisse Group
    CS,
    -6.94%    ,
    which earlier this week got a lifeline from the Swiss National Bank, closed 6.9% lower, according to FactSet data.

    At least four major banks have put restrictions on trades that involve troubled Swiss lender Credit Suisse Group or its securities, Reuters reported Friday, citing people with direct knowledge of the matter.

    “I think there are still a lot of questions right now,” said Mark Luschini, chief investment strategist at Janney, during a phone interview with MarketWatch. “Investors can’t seem to hold their enthusiasm for equities for longer than a 24-hour news cycle.”

    It’s not hard to understand why investors are still so anxious about the banking sector given the surge in borrowing from the Fed, said Matt Maley, chief market strategist at Miller Tabak + Co.

    “Given that banks borrowed over $150bn at the Fed’s discount window on Wednesday, which compares to $4.4bn the week before, one can understand why investors are worried that the situation might be a bit more dire than the authorities are admitting to right now,” Maley said in emailed commentary.

    In economic news, the Conference Board said Friday that the U.S. leading economic index fell 0.3% in February, marking the 11th straight monthly decline. U.S. industrial production was flat in February, data released Friday by the Fed show.

    Meanwhile, the University of Michigan’s latest reading on consumer sentiment showed consumers were more downbeat in March than at ay time in the last four months.

    While stocks fell Friday, they finished the week mostly higher. The Dow Jones Industrial Average slipped 0.1% for the week, while the S&P 500 booked a 1.4% weekly gain and the technology-heavy Nasdaq Composite saw a weekly rise of 4.4%, according to Dow Jones Market Data.

    Companies in focus
    • FedEx Corp.’s stock 
      FDX,
      +7.97%
       jumped 8% after beating analyst estimates in its fiscal third-quarter earnings. The shipping firm also lifted its profit forecast for the full fiscal year.

    • Shares of PacWest Bancorp 
      PACW,
      -18.95%
      and Western Alliance Bancorp 
      WAL,
      -15.14%
      tumbled as regional banks continued to face pressure, with PacWest falling almost 19% and Western Alliance dropping 15.1%.

    • Shares of Microsoft Corp.
      MSFT,
      +1.17%
      rose 1.2% as analysts saw the latest iteration of Chat GPT giving the tech giant an even greater edge. In other megacap tech names, Alphabet Inc.’s Class A
      GOOGL,
      +1.30%
      shares gained 1.3% while semiconductor giant Nvidia Corp.
      NVDA,
      +0.72%
      advanced 0.7%.

    —Steve Goldstein contributed to this report.

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  • U.S. economy is headed for trouble, leading economic index signals

    U.S. economy is headed for trouble, leading economic index signals

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    The numbers: The U.S. leading economic index fell 0.3% in February — the 11th decline in a row — continuing to signal an upcoming recession.

    Economists polled by the Wall Street Journal had forecast a 0.4% drop.

    The leading economic index, also known as the LEI, is a gauge of 10 indicators designed to show whether the economy is getting better or worse. The report is published by the nonprofit Conference Board.

    Big picture: The economy has slowed due to the end of pandemic stimulus and the effects of high inflation, which has forced the Federal Reserve to raise interest rates.

    Higher borrowing costs typically tame inflation, but at the cost of weaker economic growth.

    Although the leading index has been signaling a recession for months, the economy is still expanding. A big question is whether the latest banking crisis ends up becoming a tipping point. So far, regulators appear to have contained the damage.

    Key details: Eight of the 10 indicators tracked by the Conference Board fell in February.

    A measure of current economic conditions, meanwhile, rose a scant 0.1% in February.

    The so-called lagging index — a look in the rearview mirror — also increased by 0.1%.

    Looking ahead: “The leading economic index still points to risk of recession in the U.S. economy,” said Justyna Zabinska-La Monica, senior manager of business cycle indicators at the board.

    “The most recent financial turmoil in the U.S. banking sector is not reflected in the LEI data but could have a negative impact on the outlook if it persists,” she said.

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -1.19%
    and S&P 500
    SPX,
    -1.10%
    fell in Friday trading amid nagging worries about the U.S. financial system after the failure of Silicon Valley Bank.

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  • China President Xi to visit Moscow in apparant show of support for Putin

    China President Xi to visit Moscow in apparant show of support for Putin

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    BEIJING (AP) — Chinese President Xi Jinping will visit Russia from Monday to Wednesday, in an apparent show of support for Russian President Vladimir Putin amid sharpening East-West tensions over the conflict in Ukraine.

    Russia’s ongoing invasion of Ukraine is expected to dominate discussions. China has sought to project itself as neutral in the conflict even while in 2022 Beijing declared it had a “no-limits” friendship with Russia and has refused to condemn Moscow’s invasion.

    The meeting between the leaders was announced by both countries on Friday.

    China has said the sovereignty and territorial integrity of all countries should be respected, while condemning Western sanctions and accusing NATO and the United States of provoking Russia into military action.

    On Thursday, Chinese Foreign Minister Qin Gang told his Ukrainian counterpart Dmytro Kuleba that Beijing is concerned about the year-old conflict spinning out of control and urged talks on a political solution with Moscow.

    China has “always upheld an objective and fair stance on the Ukraine issue, has committed itself to promoting peace and advancing negotiations and calls on the international community to create conditions for peace talks,” Qin said.

    Kuleba later tweeted that he and Qin “discussed the significance of the principle of territorial integrity.”

    “I underscored the importance of (Ukrainian President Volodymyr Zelenskyy’s)’s Peace Formula for ending the aggression and restoring just peace in Ukraine,” wrote Kuleba, who spoke the same day with U.S. Secretary of State Antony Blinken.

    Wang Wenbin, spokesperson of the Ministry of Foreign Affairs, said in a daily briefing on Friday that Xi “will have an in-depth exchange of views with President Putin on bilateral relations and major international and regional issues of common concern, promote strategic cooperation and practical cooperation between the two countries, and inject new impetus into the development of bilateral relations.”

    “Currently, the world is entering a new period of turbulences and reform with the accelerated evolution of changes of the century. As permanent members of the UN Security Council and important major countries, the significance and impact of the China-Russia relations go far beyond the bilateral sphere,” he added.

    The trip comes after the destruction of a U.S. drone over the Black Sea following an encounter with Russian fighter jets, which brought the two countries closest to direct conflict since Moscow’s invasion of Ukraine a year ago.

    The Kremlin on Friday also announced Xi’s visit, saying it will take place “at the invitation of Vladimir Putin.”

    Xi and Putin will discuss “issues of further development of comprehensive partnership and strategic interaction between Russia and China,” as well as exchange views “in the context of deepening Russian-Chinese cooperation in the international arena,” the Kremlin said in a statement.

    The two leaders will also sign “important bilateral documents,” the statement read.

    Putin invited Xi to visit Russia during a video conference call the two held in late December. The visit, Putin said, could “demonstrate to the whole world the strength of the Russian-Chinese ties” and “become the main political event of the year in bilateral relations.”

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  • Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

    Dow suffers worst week since June as U.S. stocks end sharply lower after employment report, banking sector fears

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    U.S. stocks ended sharply lower Friday as investors parsed mixed signals from the February jobs report amid ongoing concerns about contagion in the banking sector from the troubles at Silicon Valley Bank.

    How stocks traded
    • The Dow Jones Industrial Average
      DJIA,
      -1.07%
      dropped 345.22 points, or 1.1%, to close at 31,909.64, its fourth straight day of declines for its longest losing streak since December.

    • The S&P 500
      SPX,
      -1.45%
      fell 56.73 points, or 1.4%, to finish at 3,861.59.

    • Nasdaq Composite
      COMP,
      -1.76%
      sank 199.47 points, or 1.8%, to end at 11,138.89.

    For the week, the Dow sank 4.4%, S&P 500 dropped 4.5% and the Nasdaq shed 4.7%, according to Dow Jones Market Data. The Dow booked its worst week since June, the S&P 500 saw its biggest weekly percentage decline since September, and the Nasdaq had its biggest percentage slide since November.

    What drove markets

    U.S. stocks slumped amid investor concerns about the banking sector after the closure of Silicon Valley Bank by the Federal Deposit Insurance Corp and in the wake of the monthly employment report released Friday.

    In a sign of investor anxiety, the CBOE Volatility Index
    VIX,
    +9.69%
    was up Friday afternoon at almost 25, after jumping Thursday, according to FactSet data, last check.

    “Bears came out of hibernation this week after waking up to a warning shot from the banking space,” said Adam Turnquist, chief technical strategist for LPL Financial, in emailed comments Friday, pointing to the collapse of Silicon Valley Bank.

    Silicon Valley Bank was closed Friday by the California Department of Financial Protection and Innovation. The Federal Deposit Insurance Corp. was appointed receiver, with the bank becoming the first FDIC-backed institution to fail this year.

    Read: Bank ETFs fall amid concerns over SVB and ‘crack’ in financial system after rate hikes

    The SPDR S&P Regional Banking ETF
    KRE,
    -4.39%
    was down more than 4% Friday afternoon, FactSet data show, while shares of Bank of America Corp.
    BAC,
    -0.88%
    closed 0.9% lower, Citigroup Inc.
    C,
    -0.53%
    slid 0.5% and JPMorgan Chase & Co.
    JPM,
    +2.54%
    rose 2.5%.

    Worries over the banking sector are “probably overshadowing” the positive aspects of the employment report, said Karim El Nokali, investment strategist at Schroders, in a phone interview Friday.

    The U.S. employment report for February showed the labor market continued to grow at a robust pace last month, with the U.S. economy adding 311,000 jobs, more than the 225,000 that economists polled by the Wall Street Journal had expected.

    But “if you dig a little deeper” into the report, average hourly earnings came in “a little lighter than expected” while labor-force participation ticked up, which are positive developments from an inflation standpoint, said El Nokali.

    Average hourly wages grew by 0.2%, a slower rate than the 0.3% rate economists had expected. It was also less than the 0.3% increase in January. The unemployment rate ticked higher to 3.6%, helped by an increase in the labor-force participation rate.

    “On the margin,” said El Nokali, the employment report was “positive for the equity market.” He said it would “probably argue more” for the Federal Reserve to raise its benchmark rate by 25 basis points at its policy meeting later this month, as opposed to a 50-basis-point hike that investors had been fearing leading up to the employment data.

    See: Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

    Fed Chair Jerome Powell said earlier this week that the “totality” of jobs and inflation data would determine whether the central bank would go back to raising its policy interest rate by another 50 basis points at its meeting later in March.

    After climbing earlier in the week, odds of a 50-basis-point rate hike by the Fed have moderated over the past 24 hours. Traders now see a 62% chance of the central bank raising its benchmark rate by 25 basis points, according to the CME FedWatch Tool.

    Meanwhile, Treasury yields sank Friday.

    The yield on the 2-year Treasury note
    TMUBMUSD02Y,
    4.594%
    dropped 31.4 basis points to 4.586%, while the 10-year Treasury yields fell 22.8 basis points to 3.694%, according to Dow Jones Market Data. The Treasury yield curve remains massively inverted, which has contributed to banks’ woes.

    Companies in focus

    —Steve Goldstein contributed to this report.

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  • Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

    Jobs report shows strong 311,000 gain in February, puts pressure on Fed for bigger rate hike

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    The numbers: The U.S. created a robust 311,000 new jobs in February, raising the odds of another sharp hike in interest rates by the Federal Reserve later this month.

    Economists polled by The Wall Street Journal had forecast 225,000 new jobs.

    The increase in employment last month followed a revised 504,000 gain (initially 517,000) in January, the government said Friday.

    The large back-to-back increases could force the Fed to raise interest rates higher than it had planned to slow the economy and loosen up the tightest labor market in decades. The central bank meets March 21-22 to plot its next move.

    A sign advertises job openings outside a business in Illinois. Lots of companies are still hiring, but the economy has slowed and job creation is likely to as well.


    Scott Olson/Getty Images

    Yet there were a few glimmers of hope for the Fed.

    The unemployment rate rose a few ticks to 3.6%. Hourly wages rose just 0.2% to mark the smallest increase in a year. And the share of able-bodied people in the labor force climbed to a three-year high.

    All of these are pressure valves on the labor market and the broader economy from high inflation.

    Investors appeared to put more weight on those factors than another big increase in employment. Stocks rose and bond yields fell.

    Big picture: An expanding U.S. economy has shown lots of resilience in the face of rising interest rates, but analysts doubt the good times can last. Higher borrowing costs typically slow the economy by depressing consumer spending and business investment.

    Just look at the housing market, where soaring mortgage rates have crushed sales and new construction. The same could happen to the rest of the economy if the Fed has to jack up rates more than Wall Street expects.

    Already, a robust U.S. labor market is showing signs of fraying. Job postings have declined, lots of large companies have announced layoffs and workers who lose a job are taking longer to find a new one.

    It just might not be enough for the Fed.

    Market reaction:  The Dow Jones Industrial Average
    DJIA,
    -1.66%
    and S&P 500
    SPX,
    -1.85%
    trimmed premarket losses in Friday trades. The yield on the 10-year Treasury fell to 3.78%.

    Investors hope some signs of cooling in the labor market will encourage the Fed to keep raising interest rates in smaller increments.

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  • Dow tumbles over 400 points in final hour of trade as investors await monthly employment report

    Dow tumbles over 400 points in final hour of trade as investors await monthly employment report

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    U.S. stocks extended losses in the final hour of trade on Thursday, while awaiting Friday’s February employment data that could help decide how large an interest rate hike the Federal Reserve will impose at its next meeting in two weeks.

    Financial sector stocks were particularly hard hit along with cryptocurrencies after Silvergate Capital Corp., collapsed overnight amid growing scrutiny in Washington. Other financial stocks fell, dragged down by SVB Financial Group, which fell by a record amount.

    How are stocks trading
    • The S&P 500
      SPX,
      -1.85%
      dropped 56 points, or 1.4%, to 3,936

    • Dow Jones Industrial Average
      DJIA,
      -1.66%
      was off 412 points, or 1.3%, to 32,387

    • Nasdaq Composite
      COMP,
      -2.05%
      declined by 174 points, or 1.5%, to 11,399

    Both the S&P 500 and Nasdaq finished higher on Wednesday, with only the Dow finishing in the red, while all three indexes remained on track for weekly losses. A weekly drop for the S&P 500 would mark its fourth such pullback in five weeks.

    What’s driving markets

    U.S. stocks trimmed earlier gains and extended losses on Thursday afternoon after trading modestly higher after the open when the latest weekly jobless claims data showed an unexpectedly large uptick in the number of Americans filing for unemployment benefits.

    The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000, the highest level since Christmas. That’s higher than the 195,000 new applicants that economists polled by the Wall Street Journal had anticipated.

    Economists said the data suggest that the labor market might be starting to slow, which is seen as a necessary prerequisite for driving inflation back to the Fed’s 2% target.

    “The labor market might just be on the cusp of an inflection point,” said Peter Boockvar, chief investment officer of Bleakley Financial Group, in emailed commentary.

    Investors are now looking ahead to Friday’s closely watched February jobs report from the Department of Labor. Economists polled by the Wall Street Journal expect 225,000 jobs were created last month after 517,000 new jobs were created in January, a number that was much higher than economists had anticipated.

    “If we do get the expected 200,000, or really anything between say 180,000 and 240,000, this would be a return to the prior trend and would signal that last month was indeed a one-off,” said Brad McMillan, chief investment officer of Commonwealth Financial Network, in emailed comments.

    “That would be perceived as a positive by the Fed and markets, suggesting that inflation may start moderating again but is still high enough to allow for continued economic growth.”

    See: Wall Street sees smaller 225,000 increase in U.S. jobs in February. A much larger gain might spur stiffer Fed rate hike.

    The Russell 2000
    RUT,
    -2.75%    ,
    the small-cap index, is on pace to close below its 50-day moving average for the first time since January 9, 2023, according to Dow Jones Market Data.

    Regional bank stocks underperformed on Thursday. Shares of Silicon Valley Bank parent company SVB Financial Group
    SIVB,
    -60.41%
    plummeted more than 61% after the company disclosed large losses from securities sales and a stock offering meant to provide a boost to its balance sheet. SVB is on pace to book the biggest one-day selloff since the dotcom boom, while its trading was halted for volatility multiple times, according to Dow Jones Market Data.

    Signature Bank 
    SBNY,
    -12.18%
     shares dropped 11.2%undefined

    The KBW Bank Index
    BKX,
    -7.70%
    of 24 leading banks slumped 7.1%, on pace for its worst day since June 26, 2020, according to Dow Jones Market Data. SPDR S&P Bank ETF
    KBE,
    -7.30%
    was down 6.5%.

    See: SVB Financial’s stock suffers biggest drop in 25 years after large losses on securities sales, equity offering

    Treasury yields fell with the yield on the 2-year note BX:TMUBMUSD02Yslipped to 4.885% from 5.064% on Wednesday. 

    Stocks suffered earlier in the week after Powell said during testimony on Capitol Hill that rates would likely need to rise even further than market participants had expected. However, the main indexes saw some relief after the Fed chief clarified that policymakers hadn’t yet decided on the size of the next rate hike.

    Investors have already digested several reports on the labor market this week, including a report on the number of job openings, which showed that the number of Americans quitting their jobs had fallen below 4 million in January for the first time in 19 months.

    “The big picture is that the labor market is easing, but it’s still tighter than it was before the pandemic,” said Sonu Varghese, a global macro strategist at Carson Group.

    See: Bad economic data won’t be good for stocks, but good data will be even worse, this JPMorgan technical strategist says

    Companies in focus

    — Jamie Chisholm contributed to this article

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  • Jobless claims jump to 211,000, the highest since Christmas. Blame New York.

    Jobless claims jump to 211,000, the highest since Christmas. Blame New York.

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    The numbers: The number of Americans who applied for unemployment benefits in early March jumped to a 10-week high of 211,000. Yet most of the increase was concentrated in New York and might not signal a broader cooling-off trend in the U.S. labor market.

    New U.S. applications for benefits rose 21,000 from 190,000 in the prior week, the government said Thursday. The numbers are seasonally adjusted.

    It’s the first time in eight weeks claims have topped the 200,000 mark.

    An unusually big increase took place in New York. Raw or actual unemployment applications in the state jumped to 30,241 from 13,878 in the prior week.

    Chief economist Stephen Stanley of Santander U.S. Capital Markets said school workers in New York City are allowed by contract to apply for benefits during winter and spring breaks.

    Asked about the upsurge, a government spokesperson said by email that “the New York State Department of Labor cannot speculate on the increase.”

    California also posted a sizable pickup, perhaps a sign that the recent spate of major corporate layoffs are starting to bite. A number of large tech firms have announced job cuts since last fall.

    The number of people applying for jobless benefits is one of the best barometers of whether the economy is getting better or worse. New unemployment applications remain near historically low levels, however.

    Economists polled by The Wall Street Journal had forecast new claims to total 195,000 in the seven days ending March 3.

    Key details: Thirty-seven of the 53 U.S. states and territories that report jobless claims showed an increase last week. Seventeen posted a decline.

    Most states aside from New York and California reported little change.

    The number of people collecting unemployment benefits across the country, meanwhile, rose by 69,000 to a two-month high of 1.72 million in the week ending Feb. 25. That number is reported with a one-week lag.

    These continuing claims are still low, but a gradual increase since last spring suggests it’s taking longer for people who lose their jobs to find new ones.

    Big picture: Jobless claims are one of the first indicators to emit danger signals when the U.S. is headed toward recession.

    So far, jobless claims remain remarkably low and the economy is still adding plenty of jobs. Economists estimate that the U.S. gained 225,000 new jobs in February.

    Economists expect hiring to slow and layoffs to increase later in the year, however, as rising interest rates restrain the economy and reduce demand for workers. A number of large companies, especially in tech, media and finance, have already announced job cuts.

    Looking ahead: “Absent [New York], the count would likely have been below 200,000 yet again,” Stanley of Santander said.

    “Broadly, initial jobless claims have remained remarkably low despite the flurry of layoff announcements in recent months, underscoring that the labor market retains considerable momentum.”

    Market reaction: The Dow Jones Industrial Average
    DJIA,
    -1.66%
    and S&P 500
    SPX,
    -1.85%
    rose in Thursday trades.

    Wall Street is hoping for signs of cooling in the labor market, which would discourage the Federal Reserve from raising interest rates more aggressively. The Fed is raising rates to snuff out inflation and reduce upward pressure on wages.

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  • Senate Republican leader McConnell hospitalized after fall

    Senate Republican leader McConnell hospitalized after fall

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    WASHINGTON (AP) — Senate Republican leader Mitch McConnell has been hospitalized after tripping at a local hotel on Wednesday evening, a spokesman for the senator said.

    The Kentucky senator, 81, was attending a private dinner in Washington when he tripped. He was admitted to a hospital for treatment, spokesman Doug Andres said.

    McConnell’s office did not provide additional detail on his condition or how long he may be absent from the Senate.

    In 2019, the GOP leader tripped and fell at his home in Kentucky, suffering a shoulder fracture. At the time, he underwent surgery to repair the fracture in his shoulder. The Senate had just started a summer recess and he worked from home for some weeks as he recovered.

    First elected in 1984, McConnell in January became the longest-serving Senate leader when the new Congress convened, breaking the previous record of 16 years.

    The taciturn McConnell is often reluctant to discuss his private life. But at the start of the COVID-19 crisis he opened up about his early childhood experience fighting polio. He described how his mother insisted that he stay off his feet as a toddler and worked with him through a determined physical therapy regime. He has acknowledged some difficulty in adulthood climbing stairs.

    The Senate, where the average age is 65, has been without several members recently due to illness.

    Sen. John Fetterman, D-Pa., 53, who suffered a stroke during his campaign last year, was expected to remain out for some weeks as he received care for clinical depression. And Sen. Dianne Feinstein, D-Calif., 90, said last week that she had been hospitalized to be treated for shingles.

    The Democratic absences have proven a challenge for Senate Majority Leader Chuck Schumer, D-N.Y., who is already navigating a very narrow 51-49 majority.

    The Republicans, as the minority party, have had an easier time with intermittent absences. It is unclear if McConnell will be out on Thursday and if that would have an effect on scheduled votes. South Dakota Sen. John Thune is the Senate’s No. 2 Republican.

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  • Asian shares follow Wall Street lower after stronger-than-expected data

    Asian shares follow Wall Street lower after stronger-than-expected data

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    BANGKOK (AP) — Shares fell Monday in Asia after Wall Street benchmarks closed out their worst week since early December. U.S. futures edged higher while oil prices fell.

    Reports on inflation, the jobs market and retail spending have come in hotter than expected, leading analysts to raise forecasts for how high the Federal Reserve will have to take interest rates to slow the U.S. economy and cool inflation.

    Higher rates pressure business activity and investment prices. So far, they do not seem to be slowing growth as much as anticipated. The S&P 500 fell 1.1% Friday to cap its third straight loss.

    “It is becoming increasingly apparent that inflation, and associated inflation expectations and wage pressures, will not decline in a predictable linear manner,” Mizuho Bank said in a commentary. “Early trading on Monday suggests that risk aversion has been brought forward to Asian markets.”

    Tokyo’s Nikkei 225 index
    NIK,
    -0.11%
    edged 0.1% lower to 27,423 and the Kospi
    180721,
    -0.87%
    in Seoul gave up 0.8% to 2,402.

    In Hong Kong, the Hang Seng
    HSI,
    -0.26%
    lost 0.5% to 19,907 while the Shanghai Composite index
    SHCOMP,
    -0.28%
    was down 0.2% at 3,259. Australia’s S&P/ASX 200
    XJO,
    -1.12%
    shed 1.1% to 7,224.80.

    Bangkok was 0.3% lower while the Sensex in Mumbai dropped 0.7%.

    On Friday, the S&P 500
    SPX,
    -1.05%
    closed 1% lower at 3,970.04. The Dow Jones Industrial Average
    DJIA,
    -1.02%
    dropped 1% to 32,816.92, while the Nasdaq Composite
    COMP,
    -1.69%
    lost 1.7% to 11,394.94.

    Higher rates can drive down inflation, but they raise the risk of a recession.

    The measure of inflation preferred by the Fed, reported Friday, said prices were 4.7% higher in January than a year earlier, after ignoring costs for food and energy because they can swing more quickly than others. That was an acceleration from December’s inflation rate and was higher than economists’ expectations for 4.3%.

    It echoed other reports earlier in the month that showed inflation at both the consumer and wholesale levels was higher than expected in January.

    Other data Friday showed that consumer spending, the biggest piece of the economy, returned to growth in January, rising 1.8% from December. A separate reading on sentiment among consumers came in slightly stronger than earlier thought, while sales of new homes improved a bit more than expected.

    Such strength paired with the remarkably resilient job market raises the likelihood the economy might avoid a recession in the near term.

    Tech and high-growth stocks once again took the brunt of the pressure.

    Investments seen as the most expensive, riskiest or making their investors wait the longest for big growth are among the most vulnerable to higher rates.

    Traders are increasing bets on the Fed raising its benchmark rate to at least 5.25% and keeping it that high through the end of the year. It’s currently in a range of 4.50% to 4.75%, and it was at virtually zero a year ago.

    Expectations for a firmer Fed have caused yields in the Treasury market to shoot higher this month, and they climbed further Friday.

    The yield on the 10-year Treasury
    TMUBMUSD10Y,
    3.928%
    was steady at 3.94%, up from 3.89% late Thursday. It helps set rates for mortgages and other important loans. The two-year yield
    TMUBMUSD02Y,
    4.815%    ,
    which moves more on expectations for the Fed, rose to 4.79% from 4.71% and is near its highest level since 2007.

    In other trading Monday, U.S. benchmark crude oil
    CL.1,
    +0.20%
    lost 56 cents to $75.75 per barrel in electronic trading on the New York Mercantile Exchange. It gained 93 cents to $76.32 per barrel. Brent crude oil
    BRN00,
    +0.10%    ,
    the pricing basis for international trading, shed 65 cents to $82.51 per barrel.

    The dollar
    DXY,
    -0.12%
    rose to 136.41 Japanese yen
    USDJPY,
    -0.30%
    from 136.45 yen. The euro
    EURUSD,
    +0.12%
    slipped to $1.0533 from $1.0549.

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  • Why is the stock market falling? Blame a ‘perfect storm’ as yields rise, dollar rallies

    Why is the stock market falling? Blame a ‘perfect storm’ as yields rise, dollar rallies

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    Rising Treasury yields appeared Tuesday to finally catch up with a previously resilient stock market, putting major indexes on track for their worst day so far of 2023.

    “Yields are popping across the curve, with the 2-year back to its November highs. This time it seems, market rates are playing catch up with fed funds,” said veteran technical analyst Mark Arbeter, president of Arbeter Investments, in a note.

    Since the beginning of the month, traders in fed-funds futures have priced in a more aggressive Federal Reserve after initially doubting the central bank would hit its forecast for a peak fed-funds rate above 5%. A few traders are even pricing in the outside possibility of a peak rate near 6%.

    Arbeter noted that markets generally lead fed-funds higher, not the other way around. Meanwhile, the U.S. dollar has also rallied, with the ICE U.S. Dollar Index adding 0.2% to a February bounce.

    Arbeter also noted that breadth indicators, a measure of how many stocks are participating in a rally, had previously deteriorated, with some measures reaching oversold levels.

    “Just another perfect storm against the equity markets in the short term,” he wrote.

    Rising yields can be a negative for stocks, increasing borrowing costs. More important, higher Treasury yields mean that the present value of future profits and cash flow are discounted more heavily. That can weigh heavily on tech and other so-called growth stocks whose valuations are based on earnings far into the future. Those stocks were pummeled heavily last year but have led gains in an early 2023 rally, remaining resilient through last week even as yields extended a bounce.

    Yields have been on the rise after a run of hotter-than-expected economic data, which have boosted expectations for Fed rate hikes. Weak guidance Tuesday from Home Depot Inc.
    HD,
    -7.09%
    and Walmart Inc.
    WMT,
    +0.59%
    also contributed to the tone.

    Home Depot sank 6.5%, and was the biggest lower on the Dow Jones Industrial Average
    DJIA,
    -2.06%    ,
    after the home-improvement retailer reported a surprise decline in fiscal fourth-quarter same-store sales, guided for a surprise drop in fiscal 2023 profit and earmarked an additional $1 billion to pay its associates more.

    “While Wall Street expects resilient consumers following last week’s robust retail sales report, Home Depot and Walmart are much more cautious,” said Jose Torres, senior economist at Interactive Brokers, in a note.

    “This morning’s data offers more mixed signals concerning consumer demand, but during a traditionally weak seasonal trading period, investors are shifting toward a glass half-empty view against the backdrop of a year that’s featured the exact opposite so far, a glass half-full perspective,” he wrote.

    The Dow remained down nearly 650 points, or 1.9%, while the S&P 500
    SPX,
    -2.00%
    slumped 1.9% to trade at 4,001 after earlier dipping below the 4,000 level for the first time since Jan. 25. The S&P 500 was on track for its biggest daily drop since December. The Nasdaq Composite
    COMP,
    -2.50%
    was down 2.4%.

    The losses left the Dow clinging to a 0.1% year-to-date gain, while the S&P 500 remains up more than 4% and the Nasdaq Composite has rallied over almost 10% so far this year.

    Arbeter identified a “very interesting cluster” of support just below the Tuesday low for the S&P 500, with the convergence of a pair of trend lines along with the index’s 50- and 200-day moving averages all near 3,970 (see chart below).


    Arbeter Investments LLC

    “If that zone does not represent the pullback lows, we have more trouble ahead,” he wrote.

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  • Soccer star Christian Atsu ‘under the rubble’ following Turkey earthquake, report says. ‘We remain hopeful for positive news’ says Ghana Football Association

    Soccer star Christian Atsu ‘under the rubble’ following Turkey earthquake, report says. ‘We remain hopeful for positive news’ says Ghana Football Association

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    Ghanaian soccer star Christian Atsu is “under the rubble” following the deadly that earthquake hit Turkey, according to a report.

    The former Chelsea, Newcastle and Everton star plays for Turkish Super Lig club Hatayspor in the city of Antakya in southern Turkey.

    Istanbul-based sports journalist Yagiz Sabuncuoglu tweeted Monday that Atsu and Hatayspor Sporting Director Taner Savut were “left under the rubble,” adding that “search and rescue teams are looking for two names.”

    “We pray for Ghana International Christian Atsu and victims of the earthquake in Turkey and Syria,” tweeted the Ghana Football Association. “We continue with our efforts to establish contact with officials of Hataspor and the Turkish Football Federation, considering the difficult situation.”

    “Our thoughts and prayers are with Christian Atsu and our brothers and sisters in Turkey and Syria. We remain hopeful for positive news,” the Ghana Football Association wrote.

    Related: Turkey quake assistance ‘already underway,’ says U.S.’s Blinken

    “Praying for some positive news, @ChristianAtsu20,” tweeted his former club Newcastle United.

    Soccer star Yannick Bolasie tweeted praying hands in response to Yagiz Sabuncuoglu’s tweet.

    On Sunday Atsu tweeted out images from Hatayspor’s victory over Kasimpasa earlier that day, in which he scored the winning goal.

    The powerful 7.8 magnitude quake rocked wide swaths of Turkey and Syria early Monday, toppling hundreds of buildings and killing more than 1,900 people.

    Turkey’s Daily Sabah reports that the runway of Hatay Airport. which serves Antakya, was split in two by the earthquake

    Additional reporting by Robert Schroeder.

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  • The stock-market rally survived a confusing week. Here’s what comes next.

    The stock-market rally survived a confusing week. Here’s what comes next.

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    Despite a Friday stumble, stocks ended a turbulent week with another round of solid gains, keeping 2023’s young but robust stock-market rally very much alive.

    But a cloud of confusion also sets over the market, and it will eventually need to be resolved, strategists said.

    Stocks rose early in the week as traders continued to bet that the Federal Reserve won’t follow through on its forecast to push the federal funds rate to a peak above 5% and hold it there, instead looking for cuts by year-end. Fed chief Jerome Powell pushed back against that expectation again on Wednesday, but a nuanced answer to a question about loosening financial conditions and an acknowledgment that the “disinflationary process” had begun convinced traders they remained right about the rate path.

    On Friday, however, a blowout January jobs report, with the U.S. economy adding 517,000 jobs and the unemployment rate dropping to 3.4%, its lowest level since 1969, appeared to affirm Powell’s position.

    Stocks took a hit, even if they finished off session lows, with the Nasdaq Composite
    COMP,
    -1.59%
    booking a fifth straight weekly gain and the S&P 500
    SPX,
    -1.04%
    achieving back-to-back weekly wins. The Dow Jones Industrial Average
    DJIA,
    -0.38%
    suffered a 0.2% weekly fall.

    “It kind of leaves you shaking your head right now, doesn’t it?” asked Jim Baird, chief investment officer at Plante Moran Financial Advisors, in a phone interview.

    See: Jobs report tells markets what Fed chairman Powell tried to tell them

    Commentary: The blowout jobs report is actually three times stronger than it appears

    At some point in the coming months there will need to be “a reconciliation between what the markets think the Fed will do and what Powell says the Fed will do,” Baird said.

    The rally could continue for now, Baird said, but he argued it would be wise in the long run to take the Fed at face value. “I think the overall tone of risk taking in the market right now is a little bit too optimistic.”

    Money-market traders did react to Friday’s data. Fed funds futures on Friday afternoon reflected a 99.6% probability that the Fed would raise the target rate by 25 basis points to a range of 4.75% to 5% at the conclusion of its next policy meeting, on March 22, up from an 82.7% probability on Thursday, according to the CME FedWatch tool.

    For the Fed’s May meeting, the market reflected a 61.3% chance of another quarter-point rise to 5% to 5.25%, the level the Fed has signaled is its expected high-water-mark rate. On Thursday, it saw just a 30% chance of a quarter-point rise in May. But markets still look for a cut by year-end.

    Of course, one month’s data do not represent the end of the argument. But unless January’s labor-market strength turns out to be a blip, the hawks on the Fed are likely to dig in and keep rates higher for longer, said Yung-Yu Ma, chief investment strategist at BMO Wealth Management, in a phone interview.

    For markets, the lack of a resolution to the long-simmering disconnect with the Fed could lead to a period of consolidation after an admittedly impressive start to 2023, he said.

    Indeed, the momentum behind the market’s rally could be set to continue. It’s been led by tech and other growth stocks that were hammered in last year’s market rout. Market watchers detect a sense of “FOMO,” or fear of missing out, is driving what some have termed a tech-stock “meltup.”

    See: Tech stock ‘meltup’ puts Nasdaq-100 on verge of exiting bear market

    “The impressive equity rally to start the year has caught cautious institutional investors, hedge funds, and strategists off guard. While overbought conditions are obvious, the near-universal level of skepticism among institutions provides a contrarian degree of support for continued strength,” said Mark Hackett, chief of investment research at Nationwide, in a Friday note.

    And then there’s earnings season, which has so far seen results from around half of the S&P 500.

    Companies through Friday had reported lower earnings for the fourth quarter relative to the end of the previous week and relative to the end of the quarter.

    The blended earnings decline (a combination of actual results for companies that have reported and estimated results for companies that have yet to report) for the fourth quarter was 5.3% through Friday, compared with an earnings decline of 5.1% last week and an earnings decline of 3.3% at the end of the fourth quarter, according to FactSet. If earnings come out negative for the quarter, it would be the first year-over-year decline since the third quarter of 2020.

    When it comes to earnings, “there’s definitely been a mood of forgiveness in the market,” said BMO’s Ma.

    “I think the market just didn’t want to see a disastrous earnings season,” he said, noting expectations remain for weak earnings in the current quarter and next, with bulls looking into the second half of this year and even into 2024 to get on a better footing.

    For the market, the main driver will remain data on inflation and wage growth, Ma said.

    Mark Hulbert: Are we in a new bull market for stocks?

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