Stocks took a breather Friday as investors continued to digest the news from the Federal Reserve earlier this week, as well as the ongoing war between Russia and Ukraine and a rise in Covid cases in Europe stemming from an emerging subvariant.
President Joe Biden spoke with Chinese President Xi Jinping on Friday to discuss Russia’s invasion of Ukraine and Xi told Biden that the United States and China each had an obligation to promote peace. Russia has made requests for military or economic aid from China and the call was seen as a critical test of whether Biden can convince China to stay on the sidelines of the conflict.
Investors were also assessing their own risk appetite. Despite the week’s big gains, they didn’t come without their share of volatility, which has showed no signs of tempering anytime soon.
“For 2022, volatility is going to be the investor narrative,” Greg Bassuk, CEO of AXS Investments, told CNBC. “We would normally feel much more bullish around any single factor having a good ability to level the volatility, but given this unprecedented level of very significant factors that could drive the markets one way or another, we don’t see volatility normalizing over the next couple of months.”
On Friday tech stocks led the market higher. Salesforce and Apple and Microsoft were among the top gainers in the Dow, rising 2% and 1%, respectively. Nvidia climbed more than 5%, Twitter gained 3.9% and Paycom and Fortinet each advanced 3%.
Shares of Moderna rose 4.4% as the company seeks FDA approval for a second Covid-19 booster shot for adults 18 years or older
Friday’s moves come as traders continued to digest the latest developments in the Ukraine-Russia war.
Several missiles hit an aircraft repair center on the outskirts Lviv in western Ukraine. Meanwhile, President Joe Biden is slated to speak with Chinese President Xi Jinping to discuss the conflict. A Ukrainian official also said one person was killed in an airstrike that hit Kyiv. (Click here for live updates.)
Russia on Thursday reportedly made a $117 million bond payment in dollars, thereby avoiding what would be a historic foreign currency debt default. Stocks extended their gains following the report. Bloomberg reported Friday that clearing houses in Europe and the U.S. have processed the payment.
Traders are also still digesting the latest Federal Reserve update from earlier this week. The central bank signaled it expects to raise rates at its remaining six meetings this year. The Fed also raised rates for the first time since 2018 on Wednesday.
On Friday, Fed Governor Christopher Waller told CNBC’s “Squawk Box” the central bank may need to enact at least one more interest rate hike this year of at 50 basis points or more in order to tame “raging” inflation.
“Fortunately, investor expectations for inflation over the next five years was brought down quite a bit, which, if sustained, will continue [to] be helpful for the Fed and the markets despite somewhat higher interest rates,” said John Vail, chief global strategist at Nikko Asset Management.