Stocks had a big fall on Friday as rising fears of a Russian invasion of Ukraine added to a spike in near-term inflation expectations and made investors nervous about short direction of the markets. U.S. National Security Advisor Jake Sullivan warned at a Friday afternoon White House briefing that a Russian invasion could take place during the Olympics, sending oil prices surging and the S&P 500 falling back below its 200-day moving average. The benchmark 10-year yield, which broke above 2% on Thursday for the first time since 2019, fell back to about 1.93% on Friday. The week’s volatility in the bond market started after hotter than expected inflation data, which spooked investors and prompted St. Louis Fed President James Bullard to call for accelerating rate hikes. For the week, the Dow Jones average fell 1%, the S&P 500 shed 1.8% and the Nasdaq Composite retreated 2.2%.


Top news last week:

  • Nvidia terminates acquisition of Arm: Nvidia this week terminated its planned acquisition of Arm Ltd. from SoftBank due to “significant regulatory challenges.” Nvidia had been trying to finalize the deal with the processor designer since September 2020, and with the transaction valued at “$40B in cash and stock” at the time (and $80B currently), it would have been the chip sector’s largest deal on record. Nvidia’s purchase faced scrutiny from the moment it was announced. The deal would have given one of the biggest semiconductor companies control over designs that rival firms rely on to develop their own competing chips. Softbank, the owner of ARM, after failing to sell ARM has announced that they are planning to take Arm public, with an IPO expected to happen in the fiscal year ending March 2023.
  • Disney impresses investors: Disney (DIS) has attracted investors again after late Wednesday as several upside surprises gave a much-needed boost to beaten-down shares. The stock rose as much as 10% in after-hours trading, after the company announced that they have gained 11.8M Disney+ subscribers (vs. 7M consensus) to reach 129.8M paying users at the end of the holiday quarter. Company executives also reiterated plans to spend $33B on new content this fiscal year as a key driver for new subscriptions in the U.S. and internationally.  Disney also saw all-time-high revenue at its “theme parks, experiences and consumer products” division, which doubled over the prior year to reach $7.2B and exceeded pre-pandemic levels.
  • $100 oil seems more realistic than ever: The push toward $100/bbl oil had seemed to be slowing this week, but reports on Friday that the U.S. believes Russia’s Vladimir Putin could invade Ukraine “any day now” lifted crude to as high as $95/bbl and an eighth straight weekly advance. Oil prices were also lifted up after the International Energy Agency warned that signs of a shortfall in OPEC+ production were worsening, as the alliance produced 900K bbl/day below target in January.  Energy Select Sector SPDR Fund (XLE) is up more than 23% year to date and is the top performing sector this year. Some analysts think that Oil prices might stay elevated for years or even rise higher, however there is one developing news that might drive oil prices down: U.S. and Iran may be making progress toward a nuclear deal, as talks resumed in Vienna on Tuesday, and such a deal “would be a game-changer, potentially pushing the global petroleum market into a surplus,” according to Bank of America analysts.

Top S&P 500 sectors last week:

  • Energy sector + 1.75% (ETF: XLE) 
  • Materials sector + 1.15% (ETF: XLB)
  • Financial sector – 0.02% (ETF: XLF)


Earnings:

Monday, February 14: TreeHouse Foods (THS), Advance Auto Parts (AAP), Avis Budget (CAR) and Arista Networks (ANET).

Tuesday, February 15: Marriott International (MAR), ViacomCBS (VIAC), Airbnb (ABNB),, Wynn Resorts (WYNN), Roblox (RBLX) and Upstart (UPST).

Wednesday, February 16: Kraft Heinz (KHC), Analog Devices (ADI), Shopify (SHOP), Marathon Oil (MRO), Cisco (CSCO), Nvidia (NVDA), Applied Materials (AMAT), Matterport (MTTR) and DoorDash (DASH).

Thursday, February 17: Walmart (WMT), Palantir (PLTR), AutoNation (AN), Roku (ROKU), Shake Shack (SHAK),

Friday, February 18: Draft Kings (DKNG).