Stocks Drop for Third Day While Bond Yields Climb: Markets Wrap

Stocks fell after Federal Reserve Bank of St. Louis President James Bullard’s hawkish remarks, with traders also monitoring the latest developments in the crisis between Russia and Ukraine.

The S&P 500 dropped for a third day, while Treasury yields climbed after Bullard repeated he favors raising rates by 100 basis points by July 1. “We need to front load more of our planned removal of accommodation than we would have previously,” he added. President Vladimir Putin countered U.S. warnings that Russia may invade Ukraine within days by staging televised meetings that emphasized continued efforts to find a diplomatic resolution to the security crisis. Defense Minister Sergei Shoigu reported that some of Russia’s massive military exercises now underway are already concluded, while others will end later.

“If an armed conflict between Russia and Ukraine is somehow avoided, a short-lived relief rally is likely, but there are still too many worries on the horizon for any type of longer lasting upward move higher in stocks,” said George Ball, chairman of Sanders Morris Harris in Houston, with $4.9 billion in assets under management. “It is time for investors to raise cash. Cash is the ultimate king when markets are volatile.”

Here are some key events this week:

• U.S. PPI, Tuesday
• EIA crude oil inventory report, Wednesday
• FOMC minutes, Wednesday
• China CPI, PPI, Wednesday
• G-20 finance ministers, central bank governors meet, Thursday through Feb. 18
• Cleveland Fed President Loretta Mester, St. Louis Fed President James Bullard speak, Thursday
• U.S. Monetary Policy Forum: speakers including Fed officials Charles Evans, Christopher Waller and Lael Brainard, Friday

Some of the main moves in markets:

Stocks

• The S&P 500 fell 0.2% as of 9:35 a.m. New York time
• The Nasdaq 100 was little changed
• The Dow Jones Industrial Average fell 0.4%
• The Stoxx Europe 600 fell 1.9%
• The MSCI World index fell 0.8%

Currencies

• The Bloomberg Dollar Spot Index rose 0.1%
• The euro fell 0.4% to $1.1309
• The British pound fell 0.3% to $1.3518
• The Japanese yen was little changed at 115.53 per dollar

Bonds

• The yield on 10-year Treasuries advanced five basis points to 1.99%
• Germany’s 10-year yield declined five basis points to 0.25%
• Britain’s 10-year yield declined one basis point to 1.53%

Commodities

• West Texas Intermediate crude fell 0.6% to $92.54 a barrel
• Gold futures rose 1.3% to $1,865.40 an ounce

Source