Dow Jones Futures: Russia In Focus For Struggling Market Rally

Dow Jones futures were little changed Sunday evening, along with S&P 500 futures and Nasdaq futures. The major indexes last week reversed lower from key resistance to undercut key support, raising fresh concerns about the stock market rally.

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A hot inflation report and fears of an imminent Russia invasion of Ukraine spurred the stock market sell-off late in the week.

President Joe Biden warned Russian President Vladimir Putin of “swift and severe costs” for invading Ukraine in a Saturday phone call. Both countries pulled diplomatic staff out of Ukraine.

Russia is conducting wargames with Belarus through Feb. 20. A Ukraine invasion possibly could follow, though it’s still possible Putin demobilizes.

Russia/Ukraine news is likely to be in focus for stock, bond and energy markets in the coming days.

This is not a good time to be adding exposure.

Still, Apple stock, Regeneron (REGN), UnitedHealth (UNH), Google parent Alphabet (GOOGL) and Oneok (ONE) are stocks near buy points that boast growth at a reasonable price.

REGN stock has a P-E ratio of just 8. Apple (AAPL), UNH stock, Google and Oneok have P-E ratios in the 20s, roughly in line with the S&P 500 index.

Low Times For High Growth

For investors used to trading highly valued growth stocks, the new year has been painful. A rising rate environment pressures highly valued stocks, especially those that are unprofitable or have triple-digit price-to-earnings ratios. Dutch Bros (BROS), with a P-E ratio above 200 ,caught the eye of seemingly every growth investor a week ago, but BROS stock reversed sharply lower last week. Tesla (TSLA) has held up better than a lot of these names, but it’s been struggling in 2022. Datadog (DDOG) bounced back last week on earnings, but was that a one-time pop or will DDOG stock make further progress?

Advanced Micro Devices (AMD), while no longer exceptionally valued, still plunged 10% on Friday, leading a sell-off in chips and techs generally. After nearly hitting its 50-day line on Wednesday, AMD stock finished the week just above its 200-day line. It’s more than wiped out its Feb. 2 pop on earnings.

Investors on Monday will get a reading on Tesla’s China sales and exports for January as part of industry data on Chinese EV and overall auto sales.

Meanwhile, Cisco Systems (CSCO) recently made a $20 billion-plus offer for data analytics and security software firm Splunk (SPLK), The Wall Street Journal reported late Friday. The two companies are not currently in talks, the WSJ said, but SPLK stock popped 11% late Friday.

In other news, Canada cleared the last trucker protest demonstrators from Ambassador Bridge, the busiest bridge between the U.S. and Canada. Ford (F), General Motors (GM) and Stellantis (STLA) all closed auto plants late last week, citing supply-chain issues related to various bridge closures.

Tesla stock is on IBD Leaderboard. Google stock is on IBD Long-Term Leaders. BROS stock is on the IBD 50.

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