4:05pm: US equities close down amid Russia-Ukraine tensions, rate woes
US stocks closed down as investors weighed the Federal Reserve’s next move to raise interest rates and Russia’s threat to invade Ukraine.
The Cboe Volatility Index — which is known as Wall Street’s fear gauge — also rose to near its session highs in afternoon trading.
On the day, the Dow declined 152 points, or 0.44%, to 34,586 and the S&P 500 dropped 0.37% to 4,402.
The tech-heavy Nasdaq fell 0.24% to 13,790.
12.05 pm: Dow slides as much as 300 points in early trading
US stocks were mixed in noon trading following comments from St. Louis Fed President James Bullard, who said the central bank needed to fight inflation more aggressively, in addition to concerns that Russia could invade Ukraine as early as this week.
At midday, the Dow fell 142 points to 34,596, while the S&P 500 eased 6 points at 4,413 and the tech-heavy Nasdaq gained 105 points to 13,896.
“The outlook for global equity markets remains weak in our view, with markets under pressure not just because of rising bond yields globally and the prospect of rate hikes, but also geopolitical tensions,” Credit Suisse technical analyst David Sneddon said.
Notable movers included shares of Nvidia Corporation, which climbed more than 3% ahead of the company’s earnings release this week.
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9.46am: US benchmarks start mostly lower
US stocks started mixed to lower on Monday but not as deep in the red as some had expected as tensions about the Ukraine/Russia situation showed some signs of easing.
Russia’s foreign minister Sergei Lavrov was reported to have suggested to President Putin that diplomatic efforts should continue.
The Dow Jones Industrial Average dropped 96 points at 34,641 in New York. The S&P 500 lost around two points to stand at 4,416. The tech-ladedn Nasdaq Composite Index added 12 at 13,803.
But Rupert Thompson, chief investment officer at wealth management group Kingswood, suggested that "some kind of Russian intervention" was now priced in and the market reaction would depend on the "extent of the move and the impact on energy supplies".
"Certainly, the experience of most geo-political conflicts in the past, as long as they have been relatively contained, is that losses have not been that great or sustained for that long. That said, there is clearly a tail-risk that any such event spirals into a wider confrontation, inflicting more material and long-lasting damage on markets," he said.
"Moving onto matters we feel rather more qualified to comment on, the other major market focus remains policy tightening," he added.
"The market is now pricing in as many as seven 0.25% rate hikes in the US over the coming year (one for each Fed meeting), which would take rates up to 1.5-1.75%. Recent hawkish rhetoric from the Fed suggests this is quite probable and there is a fair chance that rates will be hiked 0.5%, rather than just 0.25%, at the next meeting in mid-March.
"As for the UK, the market now expects rates to rise from 0.5% currently to 2.0% by early next year. Two more 0.25% rate hikes in March and May do look very likely but thereafter the pace of tightening should slow significantly. 2.0% seems an increase or two too far."
6.30am: US stocks seen opening down
US stocks are expected to start the new week on the back foot as tensions on the Ukraine border escalate, with the US warning that a Russian invasion is imminent. An acceleration in inflation to 40-year highs is also weighing on sentiment, with the market pricing in faster rate hikes by the US Federal Reserve.
Futures for the Dow Jones Industrial Average fell 0.72% in Monday pre-market trading, while those for the broader S&P 500 index shed 0.84% and the Nasdaq 100 dropped 1.11%.
Markets closed sharply lower on Friday as oil prices rose amid the escalation tensions and as US National Security Advisor Jake Sullivan urged Americans to vacate Ukraine during a White House briefing due to the heightened likelihood of a Russian attack on its neighboring country.
A report on Thursday revealed consumer inflation of 7.5% in January, the highest since 1982 and above the 7.3% expected by economists polled by Reuters.
The Dow Jones fell 1.43% to 34,738, while S&P 500 lost 1.9% to close at 4,419 and the Nasdaq shed 2.78% to 13,791.
“Investors have been wrong-footed once more as simmering geopolitical tensions and the reverberations of a high US inflation print weigh on sentiment,” commented Richard Hunter, head of markets at interactive investor.
“With the situation between Russia and Ukraine reportedly worsening with the increasing possibility of an invasion, diplomatic solutions thus far have had little impact. In economic terms, while any such invasion would be most acutely felt in Europe, there would likely be wider implications such as the possibility of supply chain restrictions and a further boost to the oil price on lessened supply. The oil price has now risen by 23% in the year to date, exacerbating inflationary pressures.
Hunter noted that last week's inflation reading has heightened concerns that the Federal Reserve will be more aggressive with its interest rate hiking programme in an attempt to stem the situation.
"The general tightening and rising interest rate environment has generally not been kind to stocks, with growth-sensitive stocks such as big tech in the eye of the storm," Hunter added.
"At the same time, earnings misses and anything other than a strong outlook are being punished, even though for the most part the reporting season so far remains comfortably ahead of expectations."