Topline
The stock market plunged again on Wednesday—with the S&P 500 falling deeper into correction territory—after the Pentagon warned a full-scale Russian invasion of Ukraine could happen imminently and Ukraine declared a state of emergency.
Key Facts
The Dow Jones Industrial Average was down 1.4%, nearly 500 points, while the S&P 500 lost 1.8% and the tech-heavy Nasdaq Composite lost 2.6%.
The benchmark S&P 500 index fell for the fourth session in a row and is now firmly in correction territory, more than 10% below its record highs earlier this year.
Markets took a hit yet again amid rising geopolitical tensions, as more Western countries geared up sanctions against Russia and Ukraine declared a state of emergency early Wednesday morning.
The Biden Administration further warned that Russia has placed 80% of its troops encircling Ukraine in forward positions, with a full-scale invasion of the country likely to take place imminently, according to U.S. officials.
Stocks broadly fell on the news, with shares of airlines, cruise lines and retailers all leading declines: Delta Air Lines lost nearly 4%, while Macy’s fell 5%.
Shares of tech stocks, which have been under pressure as bond yields spike amid concerns about the Federal Reserve’s tightening monetary policy, also tanked on Wednesday, with the likes of Amazon and Tesla falling over 3% and 7%, respectively.
Crucial Quote:
“Stocks are going to struggle to find direction until financial markets have a clear answer on whether the Russia-Ukraine crisis will have a diplomatic solution or regional warfare,” according to Edward Moya, senior market analyst for Oanda. “The Ukraine situation seems to be heading towards a pivotal moment… and that means oil prices could surge,” he says, predicting “an immediate run towards $100 [per barrel]
What To Watch For:
Markets are more at risk from the Federal Reserve’s war on inflation than the ongoing Russia-Ukraine crisis, Wall Street experts warn. Investors are “reacting emotionally following the escalating crisis between Russia and Ukraine, but history has shown that markets correct themselves quickly following large-scale geopolitical events,” according to Mark Hackett, Nationwide’s chief of investment research. “With Fed action and rising interest rates on the horizon, the correction may take longer, but investors may do well to stay cool right now.”
Contra:
“Let’s remember the S&P 500 averages about one 10% correction a year,” says Ryan Detrick, chief market strategist for LPL Financial. “Given it has been nearly two years without one, you could make the argument stocks were definitely due.”
Further Reading:
Stocks Plunge, Oil Prices Surge After Putin Orders Troops Into Eastern Ukraine (Forbes)
Recession Risks Are ‘Rising’ As Federal Reserve Scrambles To Fight Inflation, Experts Say (Forbes)
Stocks Fall For Second Week In A Row As Russia-Ukraine Tensions Weigh On Markets (Forbes)
