Wall Street Mixed As Growth Stocks, Ukraine Jitters Weigh

Wall Street's main indexes struggled for direction on Thursday after a strong rally in the previous session as megacap growth stocks lost ground, while the Ukraine crisis kept investors on edge.

Growth stocks including Alphabet Inc, Microsoft Corp, Meta Platforms, Amazon.com, Nvidia Corp and Tesla Inc fell between 0.4% and 2.3%.

Indicative of the market mood, defensive consumer staples, utilities and real estate indexes outperformed. Seven of the 11 major S&P sectors declined.

The energy index was nearly flat as Brent crude prices fell in volatile trading after climbing to almost $120 a barrel, their highest in nearly a decade, as Western sanctions on Moscow over its invasion of Ukraine raised supply concerns. [O/R]

Soaring prices of oil and other commodities have stoked fears of "stagflation", putting the Federal Reserve and other major central banks in a tough spot over raising interest rates. [O/R]

The percentage of fund managers who believe stagflation will set in within the next 12 months stood at 30%, compared with 22% last month, a survey from BoFA Global Research showed.

"When you start seeing the commodities rise, lower multiple stocks rise, defensives like consumer staples rise and growth tech sell off - that's telling me that we are still in this risk off environment despite yesterday's unwarranted rally," said Dennis Dick, proprietary trader at Bright Trading LLC in Las Vegas.

"Did we learn anything new yesterday, did we solve the Ukraine problem, are we going to solve the inflation problem? Absolutely not. So what problem did we really solve other than to ease investors' mind that the Fed isn't going to go 50 in March?"

U.S. stocks ended sharply higher on Wednesday after Fed Chair Jerome Powell said he would back a quarter point rate increase at the March 15-16 meet, assuaging some fears of an aggressive policy tightening by the central bank.

A Ukrainian negotiator said that a second round of ceasefire talks with Russia had not yielded the results Kyiv hoped for, but the sides had agreed to speak again.

"We are going to stay in a tight range until we have the Fed meeting in two weeks because there's limited earnings," said Jay Hatfield, chief investment officer at Infrastructure Capital Management in New York.

"There's no real reason to be long, unless, of course, there's some peace or stability in Ukraine which doesn't seem likely."

The CBOE volatility index, also known as Wall Street's fear gauge, was last trading at 30.57.

At 13:08 p.m. ET, the Dow Jones Industrial Average was up 51.65 points, or 0.15%, at 33,943.00, the S&P 500 was down 1.28 points, or 0.03%, at 4,385.26, and the Nasdaq Composite was down 104.40 points, or 0.76%, at 13,647.62.

Meanwhile, data showed a measure of U.S. services industry activity dropped to a one-year low in February and employment contracted.

Kroger Co jumped 10.9% after the grocer forecast upbeat annual same-store sales and profit, encouraged by strong demand for its pick-up and delivery services and sustained home-cooking trends.

American Eagle Outfitters Inc slid 10.1% after the apparel chain forecast a decline in earnings for the first half of 2022.

Declining issues outnumbered advancers for a 1.31-to-1 ratio on the NYSE and for a 1.86-to-1 ratio on the Nasdaq.

The S&P index recorded 23 new 52-week highs and five new lows, while the Nasdaq recorded 40 new highs and 143 new lows.