U.S. stocks remained lower Thursday afternoon after Russia launched a further invasion of Ukraine, but trimmed losses, with the Nasdaq Composite edging in and out of positive territory in early afternoon trading.
Russian tanks and troops rolled across the border early Thursday, Ukraine’s government said, accusing Moscow of launching a “full-scale war” after Russian President Vladimir Putin announced a “special military operation” after a months-long military buildup on the country’s borders.
How are stock indexes trading?
The Dow Jones Industrial Average
was down 555 points, or 1.6%, at 32,595. A close below 33,119.69 would put the blue-chip gauge in correction territory, marking a 10% fall from its record close.
The S&P 500
dropped 29 points, or 0.7%, at 4,196, deepening its fall into correction territory.
The Nasdaq Composite
reversed to gain 71 points, or 0.6%, at 13,109, bouncing off a session low at 12,587.88.
On Wednesday, the Dow industrials fell 464.85 points, or 1.4%, to end at 33,131.76, ending a stone’s throw from correction territory. The S&P 500 fell 1.8%, deepening its stumble into correction territory, while the Nasdaq Composite Index declined 2.6%.
What’s driving the moves?
Wall Street’s tumble follows sharp losses for equities in Asia and Europe, where the Stoxx Europe 600
finished with a loss of 3.3%, while oil spiked above $100 a barrel. Investors seeking safety piled into traditional havens, pushing down yields of government bonds, including Treasurys, boosting the dollar, and rallying gold to its highest level in more than a year.
But equities soon came off the initial plunge, with market watchers noting that the Russian invasion was widely anticipated.
“Markets have attempted to price in worst-case scenarios as it pertains to Russia and Ukraine for several weeks now,” said Art Hogan, chief market strategist at National Securities Corp., in a phone interview.
Noting that anticipation had seen investors put significant pressure on measures of stock-market valuations, “it was likely that the actual invasion would result in a crescendo of selling pressure,” he said.
While that may have exhausted the downside potential for Thursday’s session, near-term market action will be dictated by the response by Western countries to the attack as well as further actions by Moscow, he said.
Meanwhile, analysts noted that previously hard-hit technology and growth shares, which have suffered the most as yields have risen on expectations for an aggressive response by the Federal Reserve to persistent inflation, bounced back in early activity as investors scaled back expectations for a half percentage point rate increase by the Federal Reserve next month in favor of a more traditional quarter-point move.
The invasion puts the global economy in “uncharted territory” and the Federal Reserve will wait to see if there is any impact to its plans to start to raise its key policy interest rate next month, said Richmond Fed President Tom Barkin on Thursday.
“Putin is the aggressor. Putin chose this war. And now he and his country will bear the consequences,” President Joe Biden said in a Thursday afternoon speech announcing a new round of sanctions against Putin and his regime, but not including barring Russia from the SWIFT banking payments system.
Leaders of the Group of Seven nations met Thursday morning to discuss further punitive measures against Moscow. NATO Secretary-General Jens Stoltenberg called the Russian assault a “brutal act of war” and said the North Atlantic Treaty Organization had activated defense plans in the region, The Wall Street Journal reported.
The surge in prices for oil and other commodities were seen stoking fears of stagflation — a combination of persistent inflation and slowing economic growth. That could potentially complicate the path for the Federal Reserve as it prepares to begin lifting interest rates as early as next month, analysts said.
Meanwhile, investors are braced for the U.S. and its allies to unveil new sanctions while watching for signs of escalation.
“Should investors be worried? As sad as the human cost is during this event, financial costs tend to be limited,” said Giles Coghlan, chief analyst at HYCM, in emailed comments.
“A glance back at some of the gravest world events in recent history reminds us of this — the bombing of Syria in 2017, the U.S. withdrawal from Afghanistan and the North Korean missile crisis, for example, show us the market reaction to these events can be surprisingly mild,” he said. “Most dips end up being bought, so medium-term buyers can often find good value in these bleak times.”
What are other assets doing?
The 10-year benchmark Treasury note yield BX:TMUBMUSD10Y stood at 1.941% after falling toward 1.85%. That’s down from 1.976% at 3 p.m. Eastern Time rate on Wednesday, as investors sought safe assets. Yields and debt prices move opposite each other.
The dollar, also often viewed as a safe-haven during times of geopolitical unrest, was up 0.9%, as gauged by the ICE U.S. Dollar Index DXY.
Oil prices remained up sharply but off session highs, with benchmark U.S. crude
up 4.7% at $96.39 a barrel after trading as high as $100.54.
Gold GC00 was up 0.8% at around $1,924.90 an ounce.
Additional reporting by Mark DeCambre