By Geoffrey Smith
Investing.com -- U.S. stock markets opened lower on Friday after hawkish-sounding comments from a senior Federal Reserve official, which added to concerns about a possible escalation of the war in Ukraine.
By 9:35 AM ET (1335 GMT), the Dow Jones Industrial Average was down 166 points, or 0.5%, at 34,315 points. The S&P 500 and the Nasdaq Composite were down in parallel. All three cash indices had made solid gains since the Fed raised U.S. interest rates on Wednesday, and are still set to end the week in positive territory.
Fed Governor Christopher Waller told CNBC that the central bank may have to raise the fed funds target range by 50 basis points (rather than the expected 25) at one of its next meetings, owing to the strength of inflationary pressure in the U.S. economy. He said that only the geopolitical situation - meaning the war in Ukraine - had held it back this week from raising by more than 25 basis points.
"I really favor frontloading our rate hikes...Just do it rather than just promise it," Waller said.
Earlier, the outspokenly hawkish St. Louis Fed President James Bullard had said that the Fed may need to raise rates as high as 3% this year to rein in inflation, which is currently running at a 40-year high.
The barrage of Fed-speak is set to continue throughout the day, with appearances from governor Michelle Bowman, Richmond's Tom Barkin and Chicago's Charles Evans also due.
Those comments come at the end of a week when hopes for a quick end to the Ukraine war, and a reversion to more normal circumstances in global commodity markets, have receded as Russia broadened its assault on Ukraine's cities and China continued to resist Western efforts to isolate President Vladimir Putin's regime. Presidents Joe Biden and Xi Jinping began a call to discuss the war and other issues at 9 AM ET.
Secretary of State Antony Blinken on Thursday said Biden would make clear that the U.S. will impose 'costs' on China if it supports Russia more actively, for example by shipping military aid to the country. The U.S. approved $800 million in military aid to Ukraine earlier this week, while the European Union also earmarked more funds to help Ukraine defend itself.
Among early movers, GameStop (NYSE:GME) stock fell 5.6% to test a 13-month low after the videogame retailer posted a surprise loss of nearly $150 million over the holiday quarter late on Thursday. FedEx (NYSE:FDX) stock fell 5.2% after it also posted - albeit less disappointing - results caused by the wave of Omicron-variant Covid-19 over the winter, which left it short-staffed at times.
Boeing (NYSE:BA) stock outperformed, rising 0.8% after Reuters reported that it's in advanced talks to sell 100 of its 737 MAX 10 aircraft to Delta Air Lines (NYSE:DAL), which would be a substantial morale-booster at a time when the investment case is still clouded by the post-pandemic outlook for air travel.
Children's fashion retailer Kidpik also continued to make gains in the wake of its announcement of a tie-up with Walt Disney (NYSE:DIS) earlier in the week. Kidpik (NASDAQ:PIK) stock rose another 44%. and has quadrupled this week.