Growth Stocks Drag Wall St Lower On Inflation Worries

Megacap growth stocks dragged the Nasdaq and S&P 500 lower on Thursday as investors worried that soaring commodity prices due to the Ukraine crisis will add to inflationary pressures.

Growth stocks including Amazon.com, Microsoft Corp, Tesla and Nvidia fell between 0.8% and 2.7%.

The energy index gained 0.3% as Brent crude prices climbed to almost $120 a barrel, their highest in nearly a decade, as sanctions disrupted Russian oil sales. Soaring prices of oil and other commodities have raised concerns about surging inflation.

Defensive utilities and consumer staples indexes rose about 0.7% each, with six of the 11 major S&P sectors advancing.

Russian and Ukrainian negotiators met on Thursday and Kyiv said it would call for a ceasefire and humanitarian corridors to evacuate its besieged citizens, as the war entered its second week.

Russian President Vladimir Putin told French leader Emmanuel Macron that Russia would achieve the goals of its military intervention in Ukraine whatever happens.

"When you have a situation like what's going on in Ukraine, the news is the most important thing and it can change dramatically either in a positive or negative way any day. So it makes the risk a little bit higher," said Randy Frederick, managing director of trading and derivatives at Charles Schwab in Austin, Texas.

"That's where you come in look at the VIX. It is at 30 - that doesn't mean the market's going down, but it means there's a very high level of uncertainty."

The CBOE volatility index, also known as Wall Street's fear gauge, was last trading at 31.18.

U.S. stocks rallied sharply on Wednesday after Federal Reserve Chief Jerome Powell said he will back a quarter point rate increase when the Fed meets March 15-16, assuaging some fears of an aggressive policy tightening by the U.S. central bank.

At 10:37 a.m. ET, the Dow Jones Industrial Average was down 22.03 points, or 0.06%, at 33,869.32 and the S&P 500 was down 13.04 points, or 0.30%, at 4,373.50.

The Nasdaq Composite was down 130.35 points, or 0.95%, at 13,621.67.

Meanwhile, a measure of U.S. services industry activity dropped to a one-year low in February and employment contracted, suggesting that a slowdown in economic growth at the end of 2021 persisted beyond the disruption from the winter wave of COVID-19 cases.

Kroger Co jumped 10.0% 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.

Best Buy Co Inc rose 9.9% after the consumer electronics retailer said it expects annual sales to surpass peak pandemic levels in 2024.

American Eagle Outfitters Inc slid 13.5% after the apparel chain forecast a decline in earnings for the first half of 2022.

Declining issues outnumbered advancers for a 1.49-to-1 ratio on the NYSE and a 1.49-to-1 ratio on the NYSE.

The S&P index recorded 21 new 52-week highs and two new lows, while the Nasdaq recorded 31 new highs and 82 new lows.