Dow decreases 170 points as investors assess Russia-Ukraine tensions, Fed's plans for rate hikes

Dow decreases 170 points as investors assess Russia Ukraine tensions

February 16, 2022: -The Dow Jones Industrial Average and S&P 500 retreated on Monday as investors evaluated concerns regarding the Federal Reserve’s plan for interest rate hikes and tensions amid Russia and Ukraine.

The Dow decreased 171.89 points to 34,566.17, dragged down by losses in Walgreens Boots Alliance and Chevron. The S&P 500 decreased 0.4% to 4,401.67, while the technology-heavy Nasdaq Composite closed a lesser one point lower at 13,790.92. The Nasdaq was up almost 1% earlier in the session.

Investors are monitoring headlines related to the Russia-Ukraine conflict. Oil prices were less for most of the trading day on Monday, but an afternoon run sent West Texas Intermediate futures up 2.6% to above $95 per barrel and stocks lower. It was unclear what drove the late-session action, but the U.S. is closing the Kyiv embassy. Secretary of State Antony Blinken cites the “dramatic acceleration in the buildup of Russian forces” on Ukraine’s border.

In afternoon trading, the Cboe Volatility Index spiked to near its session highs, briefly hovering around 31. It ended the day above 28 points.

The risk-off move hit industrial stocks such as Caterpillar and Boeing, which fell 0.7% and 1.1%, respectively.

“The outlook for global equity markets remains weak in our view, with markets under pressure not just because of the increasing bond yields globally and the prospect of rate hikes, but geopolitical tensions,” said David Sneddon, technical analyst at Credit Suisse.

Still, it wasn’t all pessimistic positioning. The VanEck Russia ETF, U.S.-traded security which invests in top Russian companies, closed from 2.5%, along with the Russian ruble vs. the U.S. dollar. The VanEck Russia ETF lost over 7.5% on Friday.

Oil stocks that outperformed on Friday’s Ukraine-driven trading were down on Monday. Exxon Mobil fell 1.5%, and ConocoPhillips came down to 2.1%.

On Monday, St. Louis Fed President James Bullard told CNBC that the central bank needed to fight inflation more aggressively, echoing comments he made last week that pressured the stock market.

Markets are now expecting a 50 basis point, or 0.5 percentage point, increase at the central bank’s March meeting.

Economists at Goldman Sachs raised their Fed forecast to seven hikes for 2022 and said it sees the 10-year yield, which hits 2.25% this year. The firm lowered its 2022 S&P 500 price target to 4,900 from 5,100. That would represent just a 2.8% return from where the benchmark ended in 2021. Goldman said that higher rates would crimp valuations.

Investors have been grappling with a potential war between Russia and Ukraine. A phone call over the weekend amid U.S. President Joe Biden and Russian President Vladimir Putin, in which Biden attempted to dissuade Putin from attacking Ukraine, failing to achieve a breakthrough.

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Dow decreases 170 points as investors assess Russia-Ukraine tensions
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Dow decreases 170 points as investors assess Russia-Ukraine tensions
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The Dow Jones Industrial Average and S&P 500 retreated on Monday as investors evaluated concerns regarding the Federal Reserve’s plan for interest rate hikes
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The Women Leaders
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