US Close- Surging oil prices drive growth concerns and sink stocks, ISM impresses, Yields drop, Yen Stronger

US stocks tumbled as investors struggle to go long risk as the Russia-Ukraine crisis intensifies and as surging oil prices threaten economic growth prospects.  Wall Street is hitting the ‘sell button’ on everything except for energy stocks. Traders are trying to reduce their exposure to anything that has exposure to Russia and some are getting concerned that a prolonged economic slowdown is here. Stagflation risks have never been greater and that should continue to fuel the many commodity super cycles that are running hot.  Oil, natural gas, wheat, and palladium are rallying strongly today.

ISM

The ISM manufacturing picked up in February as supply disruptions persist.  The headline manufacturing index rose from 57.6 to 58.6, which was better than the 58.0 consensus estimate. New orders remained in strong growth territory, reaching the highest level since September.  The employment index weakened but still remains in expansion territory.  The ISM report suggests manufacturing activity remains strong but consumption could be leveling off as supply chain and logistic issues become more troublesome.

Yields

Risk aversion is running wild and Treasury yields are freefalling.  The 10-year Treasury yield fell 12.1 basis points to 1.702%.  Wall Street is fleeing to safe-havens as oil prices surge to seven-year highs. The flight-to-safety has the Japanese yen as the top currency, with the dollar in second place.

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Ed Moya

Ed Moya

Senior Market Analyst, The Americas at OANDA
With more than 20 years’ trading experience, Ed Moya is a senior market analyst with OANDA, producing up-to-the-minute intermarket analysis, coverage of geopolitical events, central bank policies and market reaction to corporate news. His particular expertise lies across a wide range of asset classes including FX, commodities, fixed income, stocks and cryptocurrencies. Over the course of his career, Ed has worked with some of the leading forex brokerages, research teams and news departments on Wall Street including Global Forex Trading, FX Solutions and Trading Advantage. Most recently he worked with TradeTheNews.com, where he provided market analysis on economic data and corporate news. Based in New York, Ed is a regular guest on several major financial television networks including CNBC, Bloomberg TV, Yahoo! Finance Live, Fox Business and Sky TV. His views are trusted by the world’s most renowned global newswires including Reuters, Bloomberg and the Associated Press, and he is regularly quoted in leading publications such as MSN, MarketWatch, Forbes, Breitbart, The New York Times and The Wall Street Journal. Ed holds a BA in Economics from Rutgers University.
Ed Moya