Stocks started in the red, went green, then tumbled late this morning, then surged back into the green at noon, and then spent the afternoon sliding back into the red. It seemed like a nervous trade, whatever that means.
First, the scoreboard:
- Dow: 16,067.4 (-41.4, -0.2%)
- S&P 500: 1,841.1 (-5.2, -0.2%)
- Nasdaq: 4,245.4 (-15.0, -0.3%)
And now the top stories:
- Traders will be watching Sunday's referendum in Crimea where voters will be asked whether they want to join with Russia. Most experts seem to agree that the referendum is illegal as it is out of line with Ukraine's constitution. "[I]t is widely expected that Sunday’s referendum will deliver a strong majority in favour of joining Russia, and that Russia, which recognizes the current Crimean authorities as legitimate and argues that the Kiev authorities are not legitimate, will then pass a law allowing external territories to accede to Russia, paving the way for the Russian Federation to annex Crimea," said the analysts at Morgan Stanley. "While we expect de-escalation eventually, near term, further sanctions are likely, although we expect the impact will be manageable."
- Russia's MICEX stock index fell 0.6% today, and it's down 17% since the beginning of the year. Some investors can't help but wonder if this is a buying opportunity. "Valuations have fallen sharply, with the forward P/E down near 4.0x forward earnings, its lowest since February 2009, and the P/B has fallen to 0.7x, just 10% above the 2008-9 trough of 0.63x," noted UBS's Geoff Dennis. But that's no buy signal. "[T]he worst case scenario that Russia becomes uninvestible (capital controls, such as in Malaysia in 1998, and even the expropriation of foreign owned assets in Russia) with Russia kicked out of MSCI GEMs cannot be entirely ruled out... Overall, our view is that investors should react to this crisis, not by cutting positions, but by rotating out of domestic names which are vulnerable to a growth slowdown into export names, which are more defensive to the weak Ruble."
- The preliminary results of the University of Michigan's March consumer confidence survey was disappointing. The headline index fell to 79.9 from 81.6 in February. The economic conditions subindex rose to 96.1 from 95.4, but the economic outlook subindex fell to 69.4 from 72.7. "Most of the decline ... can be attributed to the unseasonably bad weather," said Capital Economics' Amna Asaf. "[S]ince weather effects tend to be short-lived, confidence will probably rebound in the coming months. With the labour market gradually improving and income growth prospects bright, any slowdown in consumption growth in the first quarter will probably be temporary too."
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