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Market check: Financial, tech, travel stocks under pressure

In this article:
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Yahoo Finance Live's Jared Blikre breaks down midday trading in the stock market.

Video Transcript

JULIE HYMAN: We continue to see stocks under pressure this morning in the wake of a jobs report that was largely better than estimated. Our Jared Blikre has been digging into the action here. So Jared, what's sort of the big picture takeaway? Let's start there. Is it that investors are more focused on Russia-Ukraine and commodity price spiking than they are in the jobs report? What's going on here?

JARED BLIKRE: I think it's both at this point. And you take a look at the market action or the market reaction to the jobs report-- the first move usually a little bit of misdirection here. And you're looking at the NASDAQ composite. This is a two-month chart. And you can see at the very right edge of it, we have broken down out of the prior five-day range. Now, if you take a look at the S&P 500, you can see we are still in this range.

So we've basically been tracing out the same pattern for six days now. Is the next direction, what is that going to be? Well, we've been here before. There was another period of consolidation. In this case, we broke to the downside, came back up, and here we are. So is it going to repeat? Are we going to break to the downside like this? Or are we going to break out, maybe come back a little, and who knows? Why not? To the moon. We'll have to see what comes of that.

But also want to check out the Russell 2000. Small caps looks pretty much the same as the S&P 500. Just back to the jobs report, I think the headline numbers came in stronger than anticipated, with the exception of that labor wage growth number, which could be due to those compositional effects that we were talking about. If you just kind of take that out of the equation, it might require a Fed that's a little bit more hawkish than people had anticipated.

But that's not being reflected in the federal funds futures markets right now. We're looking at the 30-year on our screen, but I'm talking about the benchmark rate and the futures for it, because there is now a 6% chance of no rate hike in March. Does anybody think that's really going to happen? No, but the fact that it's becoming more profitable and coming up zero I think is quite relevant to the situation.

So let's take a look at some of our heat maps here. Here's the travel and reopening phase. This is a five-day look. We can see lots of downside action here. In fact, this is the worst week for travel if it ends this way since, what, mid 2020, so really taking the wind out of the sails. And I think this is really more the Russia-Ukraine situation than it is the Federal Reserve situation, with respect to this particular group.

But let's take a look at the sector action for the entire week. And we see energy not surprisingly, with crude touching $116 per barrel. That's WTI. Energy up 7.7%, followed by utilities, real estate, and industrials. But the fact that utilities and real estate playing so prominently in this list just tells me it's more defensive than offensive here, more bearish than bullish. And financials just getting whacked to the downside with the depressed yields and that fall down in yields that we saw because of the Russia situation.

After that, tech and then consumer discretionary, those are the sectors that house things like Amazon, as well, of course, Apple, so a lot of the mega caps in there. Overall, let's take a look at the NASDAQ 100. So there you see it. Amazon down 6% for the weekend, Nvidia down 5%, Facebook down nearly 5%. The only green among the mega caps is Tesla. But even EV, which was faltering yesterday, having a pretty bad week here. We can see GM down 10%. Lucid Motors-- I believe they announced earnings this week-- they're down 14% So the list goes on, but you kind of get the idea here, not exactly risk-on.

JULIE HYMAN: Yeah, Lucid had announced a price increase and then changed its mind, which didn't help its shares. Jared, can we go back to travel for just a second here? Because I think we should really emphasize the sort of carnage that we're seeing within that group. And it feels like, say, if you look at-- I don't know-- take any of these-- take whatever you want to use as representative-- and the sort of fits and starts over the longer term that we have had. I mean, like, it was like, OK, each wave of the pandemic obviously hit these guys anew. We're recovering a little bit. No, then we're pulling back. Then we're recovering a little bit. Then we're pulling back.

And now you have Russia's invasion of Ukraine as the latest hit, right? And this latest concern, not only the concern that European travel is not going to recover-- that was something investors had been waiting for, international travel-- but obviously, fuel prices. What is that going to do to margins for these companies? Yes, they hedge, they buy in advance, but nonetheless, this has got to hurt. So it's just remarkable the moves that we are seeing in those travel stocks.

JARED BLIKRE: I agree. And you take any one of these charts. They all pretty much look the same. You have this pandemic low right here. And then you have a rise into early 2021, but then it's just a series of lower highs and lower lows here, so that's a downtrend. You can make the case that maybe this is a flag of some sort, but you brought up an interesting point. Europe is going to get hard-- it is getting hit harder, much harder than the US because of their proximity, because of their exposure.

And I read a report yesterday that the surging fuel prices are going to add $20 to the average ticket price of an airline, $80 for some of the longer haul flights. So you add that up, and you wonder, do the airlines have this kind of pricing power? I think in the short-term, yeah, because if people want to go somewhere, they're going to go there. But it's going to start creeping up in people's minds that travel is more expensive. They don't want to necessarily do that.