U.S. stocks extended losses in late-day trading Friday as risk sentiment deteriorated after Ukraine’s top diplomat said he didn’t see progress in talks with Russia. 

Comments by Ukrainian Foreign Minister Dmytro Kuleba came after IFX cited Russian President Vladimir Putin as underscoring daily efforts to resolve tensions, news that helped bolster risk appetite in early New York trading. Meanwhile, President Joe Biden on Friday called on U.S. lawmakers to join Western allies to end normal trade relations with Russia.

The S&P 500 closed near session lows, capping the worst weekly performance since the period ending Jan. 21. Global markets have been on edge as the worsening war in Ukraine and sanctions against Russia stoke inflation fears and threaten to sap growth. The dollar gained on haven demand Friday, climbing back to near the highest 2020.

Markets lurched between panic-selling and dip-buying of beaten-down stocks that pushed S&P 500 to the biggest daily losses and gains since 2020. Volatility wasn’t limit to equity markets, with oil in New York swinging in an arc from above US$130 a barrel to as low as almost US$103. Bonds too gyrated, with 10-year Treasury yield climbing from below 1.7 per cent to above 2 per cent. 

“We’re in a headline-driven market and headline-driven markets happen during periods of uncertainty,” Keith Lerner, co-chief investment officer and chief market strategist at Truist Advisory Services, said by phone. “We always have uncertainty, but when you have higher-than-normal uncertainty, each headline tends to get over-extrapolated in both directions.”

Those wild swings came in a week that saw inflation in February accelerating at the fastest pace in 40 years in February, reinforcing expectations that the Federal Reserve next week will start raising interest rates to contain inflation that some economists see rising above 8 per cent. If the European Central Bank’s decisions Thursday are any guide, policy makers may prioritize their inflation fight over the need to support economic recovery.

“Fundamentals are taking a back seat to the Fed, which is taking a backseat right now to what’s going on in Ukraine, Tom Hainlin, national investment strategist at U.S. Bank National Association, said by phone. The Fed meeting is “going to be a material event -- anticipating that the Fed’s going to finally pivot to the beginning of tightening policy.”

Bond traders ramped up inflation projections Friday, with the 30-year security at the highest since 2013. At 2.60 per cent, the long-dated breakeven -- the market’s forecast for price growth over the next three decades -- is joining short-term maturities at historically elevated levels.

U.S. consumer sentiment tumbled in early March to the lowest since 2011 and year-ahead inflation expectations rose to a four-decade high in the aftermath of Russia’s invasion of Ukraine, according to a University of Michigan sentiment index.

Some of the main moves in markets:

Stocks

• The S&P 500 fell 1.3% as of 4 p.m. New York time
• The Nasdaq 100 fell 2.1%
• The Dow Jones Industrial Average fell 0.7%
• The MSCI World index fell 1.3%

Currencies

• The Bloomberg Dollar Spot Index rose 0.5%
• The euro fell 0.7% to US$1.0911
• The British pound fell 0.4% to US$1.3036
• The Japanese yen fell 1% to 117.25 per dollar

Bonds

• The yield on 10-year Treasuries was little changed at 1.99%
• Germany’s 10-year yield declined two basis points to 0.25%
• Britain’s 10-year yield declined three basis points to 1.49%

Commodities

• West Texas Intermediate crude rose 3.1% to US$109.31 a barrel
• Gold futures fell 0.6% to US$1,988.80 an ounce