The S&P 500 rose on Thursday, erasing a sharp decline from the previous day when investors looked past Russia’s attack on Ukraine.
The invasion comes at a time when global stock markets are already faltering due to high inflation that has resulted from the pandemic.
The S&P 500 traded 0.5% higher after falling more than 2.6% earlier in the session. The figure remains in correction for more than 10% since the January 3 record close. 30 Dow shares fell about 50 points. The figure of blue chips is more than 10% below its record. The Nasdaq Composite rose 2.2% after opening in the bear market, falling more than 20% from a record high in November. Since then, Nasdaq has traded outside this range.
As of Thursday afternoon, stocks were well below their daily lows. By the start of the session the Dow was down more than 800 points. At one point, the Nasdaq fell nearly 3.5%.
The President Joe Biden on Thursday considered Russia’s invasion of Ukraine, announcing that the United States would impose a new wave of sanctions against Russia in a broad effort to isolate Moscow from the world economy. The White House has also allowed additional troops to be stationed in Germany as NATO allies seek to strengthen defenses in Europe, Biden said.
“Today, I am sanctioning additional strong sanctions and new restrictions on what can be exported to Russia,” Biden said. “This will lead to serious costs for the Russian economy both immediately and over time.”
Investors seemed to be buying the fall of some of the biggest technology names. Amazon, Netflix, Alphabet and Microsoft traded higher, erasing a sharp decline from the previous day. Netflix grew by almost 5% and Microsoft – by 3%. Alphabet and Meta rose 2.5%.
Moscow has launched hostilities in Ukraine Thursday night. There have been reports of explosions and rocket attacks on several key cities in Ukraine, including the capital Kiev. Russian President Vladimir Putin called the invasion “demilitarization” of Ukraine and said that Russia’s plans do not include the occupation of Ukrainian territories.
NATO, the world’s most powerful military alliance, is set to strengthen its presence on its eastern front following Russia’s invasion of Ukraine. (Investors can follow Live CNBC blog tracking developments on Thursday in relation to Russia’s attack on Ukraine.)
“Russia remains part of the world economy. We are not going to harm the system of the world economy of which we are a part while we are part of it,” Russian President Vladimir Putin said on Thursday.
“Russia’s invasion is actually worse than the baseline expectations we had or the markets. I would argue that we are talking basically another 5-6% down, which will lead to 20% or bearish territory,” Binki Chad said. , Deutsche Bank ‘s chief American investment and global strategist, on Thursday on CNBC’ ‘Squawk Box’.
Oil prices also shifted from highs during the trading day. Brent’s global oil benchmark jumped by about 1% $ 92 a barrel after $ 100 for the first time since 2014. The US WTI oil price was trading about 1% above about $ 92 per barrel after earlier in the session reached $ 100 per barrel. Natural gas prices jumped up 2.9%.
Treasury bond prices rose and yields fell, and the base rate of 10-year bonds fell to 1.86% as investors sought safe bonds. The move reversed yield growth, which took a 10-year level well above 2% earlier in the session. Gold futures rose 1.5% to $ 1,939.80 an ounce as investors sought other safe havens. The Cboe Volatility Indexfear on Wall Street on Thursday rose to above 37, almost reaching the highest levels of the year.
European stocks sold out sharply on Thursday after that Russia has launched an offensive on Ukraine, turning a protracted diplomatic crisis into a military conflict. Pan-European Stoxx 600 decreased by more than 3% to its lowest level for the year.
“The worst-case scenario for Russia’s invasion of Ukraine outside the separatist regions is a shock to stock and oil markets. The downturn could have a significant negative impact on the European economy, which will modestly weaken US activity,” said Katie Bostyancic, chief economist at Oxford Economics. “In the face of such uncertainty and the negative economic consequences of the Fed, it is likely to raise the political rate by only 25 bp. in March, but will still move forward. “
Among the stocks in green were energy and defense stocks. Exxon Mobil was a little higher. Enphase Energy has risen by more than 6%. Lockheed Martin scored 1.5% and Raytheon Technologies was a little higher.
“Investors should expect strong sanctions against Russia that will slow growth and put pressure on rising commodity prices,” wrote Dennis DeBuscher of 22V Research. “How long it will take for this crisis to unfold will determine the impact of inflation, financial conditions and growth. In the short term, escaping security means that Treasury yields, expectations of rising rates and risky assets are sharply lower.”
The situation in Ukraine has added tensions in the market, which was worried about the strengthening of the Federal Reserve against the background of escalating inflation. In recent days, traders have adjusted their views on the Fed with the probability of raising the interest rate by 0.5 percentage points in March to 17%, according to CME Group.
Investors can buy stocks because they believe the central bank may slow the upturn schedule due to geopolitical turmoil.
– Christine Van from CNBC contributed to this report.