Summary

The major averages closed lower this week as macroeconomic and geopolitical forces took hold of the market heading into the weekend.

Things started positive through the first half of the week and was quickly reversed on Thursday following a hotter-than-expected inflationary reading. Immediately after the hot numbers, market traded down during the last 1 hour of pre-market trading. When the main session started, the market was able to reverse those losses, as the concept of inflation running hot is not particularly foreign to the market. However, in the middle of the day, commentary from St. Louis Fed President James Bullard, who called for accelerated rate hikes, refueled the negative sentiment again and the market was down much lower than pre-market.

Market attempted to stabilize early in the day Friday on reports of other Fed officials pushing back on Bullard's hawkish comments. However, once again, when the afternoon comes, the broader market gyrated — selling accelerated — as monetary policy speculation took a back seat to reports that Russia could launch an invasion into Ukraine “any day now.”

Under the hood this week, the energy and materials sectors were the relative winners, while communication services and real estate and technology finished down.

Here’s a quick look at some of the broader market measures we like to keep an eye on: The U.S. dollar index stands at around the 95 level. Gold advanced to the mid-$1,800s region, catching an extra boost on Friday on the Russia headlines. WTI crude prices have leveled off in the low-$90s per barrel region. The yield on the 10-year Treasury broke above the 2% level on the back of the consumer price index report.

What To Watch In The Week Ahead

1. Russia - Ukraine Tension: the risks here will continue to be priced in in the coming days. On Friday afternoon, one of the factors that sent the market down so precipitous was the assessment made by US Intelligence that Russia would invade Ukraine over the weekend. Because it hasn't happened yet, we will likely see the market reverse some of Friday's losses. Sources have now moved up the date to Wednesday as a possible date for the attack. 

2. Fed Minutes: transcript/ minutes from the last FOMC meeting will be released on Wednesday. The last time the FOMC minutes were released, market was negatively surprised and we saw an ugly sell-off to follow. This time investors need to watch for the central bank's plans for rate hikes, inflation outlook and balance sheet.

3. Fed Speakers: a bunch of Fed officials will come out and speak to the public in the coming days. St. Louis Fed President James Bullard will kick off the series by appearing on CNBC today at 8:30 am. This is the guy who last week said he would like to see rates at 1% by July, meaning in this upcoming March meeting the Fed would raise rates by 0.50%. However, other Fed officials have pushed back on Bullard's comments. Atlanta Fed President Raphael Bostic said that his view on rate hikes have not changed even after last week's hot inflation report (3-4 hikes this year with 0.25% each). Richmond Fed President Tom Barkin said now is not the time and need for a 0.50% rate hike. San Francisco Fed President Mary Daly said after the inflation report that a 0.50% hike is not her preference. Cleveland Fed President Loretta Mester said she does not expect to raise interest rates by more than 0.25%. Lastly and most importantly, Fed Chairman Jerome Powell remains open, didn't say he would not do 0.50%, but also did not say he favored it.