Moody’s Cuts Russia’s Credit, Wheat Prices Soar, Powell Allays Investor Fears

Moody’s cut Russia’s credit by six notches as it expects “sustained economic disruption” following global sanctions on the country following the invasion of Ukraine. The Russian stock market remained closed.

U.S. stocks are higher after yesterday’s soar that followed Federal Reserve Chairman Jerome Powell’s congressional testimony signaling that a Fed rate hike would be less than investors feared .

Key points to remember

  • Leading credit agency Moody’s cut Russia’s credit by six notches.
  • US equities are up after yesterday’s rise following Fed statements that eased fears of a sharp rise in interest rates.
  • Shares of Best Buy Co. Inc. and Kroger Co. rose after reporting better-than-expected earnings.

Powell is due to testify before Senate lawmakers this morning after telling House lawmakers yesterday that he would only propose a quarter-percentage-point rate hike at the central bank’s March meeting. All major US equity indices posted solid gains of more than 1.5% yesterday.

The yield on the 10-year Treasury note rose to 1.86% after slipping last week. Crude oil prices shed earlier gains, falling to around $109.60 a barrel after approaching $117 a barrel. Prices are still at their highest level since 2014.

Major retailers reporting profits today include Costco Wholesale Corp. (COST), Big Lots Inc. (BIG) and Gap Inc. (GPS). Shares of Best Buy Co. Inc. (BBY) and Kroger Co. (KR) rose after reporting better-than-expected earnings. Other companies expected to report include Broadcom Inc. (AVGO), Cooper Companies Inc. (COO) and Marvell Technology Inc (MRVL).

The Labor Department reported that initial claims for state unemployment benefits fell by 18,000 to 215,000 for the week ended Feb. 26, less than economists had expected.

Later in the day, the Institute for Supply Management (ISM) is expected to report an increase to 61 in its services activity index for February, from a drop to 59.9 the previous month.

The euro fell against the dollar and bitcoin fell from its recent highs.

Quick Hits: Today’s Headlines Inc. (AMZN) plans to close all of its 68 brick-and-mortar bookstores, pop-up stores and “4-star” stores in the US and UK, ending some of its longest sales sprees at physical retail. The retailer said it was working to identify new roles within the business for employees at stores it would close.

Separately, Amazon workers at a second New York warehouse will hold a vote to unionize. Organizers had already won the right to vote at another facility in Staten Island, New York.

Tesla (TSLA) CEO Elon Musk has called on the United Auto Workers (UAW) to hold a union vote at Tesla. The UAW did not respond after Musk tweeted that he was open to a union vote after long resisting the move.

Several states have launched an investigation into the effects of TikTok on children. A bipartisan group of eight attorneys general is expanding its initial investigation into Meta Platforms’ Instagram activities and its potential harm to young users.

Peloton Interactive Inc. (PTON) founder and former CEO John Foley has sold $50 million worth of stock to MSD Partners, which is backed by Michael Dell, according to a securities filing. Even with the stock sale, Foley will retain effective control of Peloton.

Apple Inc. (AAPL) will hold its annual spring product launch event on March 8, the company announced. Apple is expected to launch a cheaper version of its popular iPhone with 5G, a new version of the iPad Air and a high-end Mac Mini.

The big story: soaring wheat prices

Filling up your gas tank isn’t the only thing that costs more: the cost of bread is also expected to rise, as wheat prices hit their highest in nearly 14 years.

Wheat prices once again opened the limit on the Chicago Board of Trade (CBOT) yesterday, the exchange’s limit on how far prices can go up or down in a day. Wheat futures settled at $10.59 a bushel, up nearly 8%, on the CBOT. This is the highest level since 2008.

The conflict between Russia and Ukraine has raised fears of wheat shortages. Russia is the world’s largest exporter of wheat, and Ukraine is one of the four largest exporters of this product. Of the 207 million tonnes of wheat traded internationally, 17% comes from Russia and 12% from Ukraine, according to Bank of America.

Prior to the Russian invasion, Ukraine was on track for a record year for wheat exports, according to the US Department of Agriculture. However, the conflict has caused major disruptions in Ukrainian ports, impacting the export market there.

Soaring wheat prices will likely drive up the costs of US consumer goods like cereal and bread. Prices for grains and baked goods have already climbed 6.8% over the past year, according to the US Bureau of Labor Statistics.

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