By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Friday, still weighed down by the selloff in bonds, which continued globally overnight and again in early dealings in New York.
By 9:45 AM ET (1345 GMT), the Dow Jones Industrial Average was down 85 points, or 0.2%, at 34,503 points. The broader-based S&P 500 was down 0.4% and the Nasdaq Composite was down 0.8%. All three indices are on course for a losing week, having experienced a sharp upward repricing of interest rate expectations in response to coordinated guidance from Federal Reserve officials.
Wall Street analysts are now scrambling to revise their forecasts: Goldman Sachs strategist Jan Hatzius told clients in a note that the Fed may have to raise interest rates to 4% in order to bring down inflation, a full percentage point above the level that was, until recently, consensus. Higher inflation across the spectrum - and the consequent prospect of higher interest rates - is prompting analysts to shift their recommendations away from loss-making technology-driven companies and into stocks that are more firmly grounded in the material world.
Goldman analysts, for example, cut their recommendation on online brokerage Robinhood Markets (NASDAQ:HOOD) to sell from neutral, despite it having already lost nearly two-thirds of its value since Goldman helped it to list its stock less than a year ago. The analysts also downgraded their price target for Coinbase Global (NASDAQ:COIN) stock, more than tripling their estimate of its losses in 2023 and 2024. Robinhood stock fell 7.6% to a three-week low, while Coinbase stock fell 2.7%, also testing a three-week low if not breaking below it.
Beneficiaries included two of the U.S.'s two biggest grains traders, who were also helped by a UN report showing world food prices rising at their fastest since the organization started compiling records. Archer-Daniels-Midland (NYSE:ADM) stock rose 0.5% to a new all-time. It's now up 50% in the last six months. Rival Bunge (NYSE:BG) saw its stock rise as much as 0.6% to a new 14-year high before it retraced somewhat.
The mood was not helped by news out of Europe overnight, where Russian rocket artillery killed some 40 people and injured over 100 at a train station in Kramatorsk in the Ukrainian-held part of Donetsk region. There is "no prospect of an easing of tensions or any diplomatic progress, let alone peace, with an intensification of the conflict in the Donbas and Kharkiv regions sadly seemingly inevitable," said Marc Ostwald, head of macro research at ADM ISI in London.
Those developments, as usual, supported crude oil prices, as the risk of tighter sanctions forcing European buyers to chase supplies elsewhere on the global market rose again. The EU's top diplomat Josep Borrell said that it is a "matter of time" before the bloc's tentative sanctions are extended to include oil. Chevron (NYSE:CVX) stock, Exxon Mobil (NYSE:XOM) stock, and Occidental (NYSE:OXY) stock, up 1.2%, 1.7% and 2.8% respectively, all outperformed as crude futures rose back above $100, despite there being no end in sight to the disruption of global demand from local lockdowns across China, notably in manufacturing and financial hub Shanghai.