U.S. stock gauges all traded sharply lower Wednesday, with the S&P 500 index deepening its slide into correction territory and the Dow industrials also looking at sliding into correction, in the wake of Russian President Vladimir Putin’s decision to order troops to breakaway regions of Ukraine.
The Dow and Nasdaq Composite were threatening to fall for a fifth straight session, with investors waiting to see Putin’s next move in Eastern Europe.
How are stock-index futures trading
The Dow Jones Industrial Average
fell 439 points, or 1.3%, to trade around 33,155, the blue-chip index needs to hold above 33,119.685, which would represent a 10% decline from its Jan. 4 record high, meeting the commonly used definition for a correction.
The S&P 500 index
fell 72 points, or 1.7%, to around 4,232, deepening its descent into correction territory.
All three benchmarks had been solidly higher earlier Wednesday.
On Tuesday, the Dow dropped 482.57 points, or 1.4%, to close at 33,596.61, its lowest finish since June 18, according to Dow Jones Market Data. The S&P 500 fell 44.11 points, or 1%, to end at 4,304.76, the lowest closing value since Oct. 4. The Nasdaq Composite shed 166.55 points, or 1.2%, to finish at 13,381.52.
What’s driving the market?
Losses were picking up steam on Wednesday as concerns about Russia and Ukraine remained in focus.
The Associated Press reported that Russian forces arrayed along Ukraine’s borders are “as ready as they can be” for an invasion, if ordered to launch it, citing a senior U.S. defense official in Washington.
U.S. authorities have estimated that Russia has more than 150,000 troops along Ukraine’s borders with Russia and Belarus.
Investors expressed uncertainty about Russia’s incursion in Ukraine on Tuesday. Market participants have been on edge after Russian President Vladimir Putin ordered forces into separatist regions of eastern Ukraine, raising fears that a full-scale invasion was about to materialize.
“If Russia de-escalates…by simply recognizing two breakaway states, the economic and market impact could be similar to Crimea in 2014: limited sanctions and by extension limited economic fallout,” wrote Lauren Goodwin, economist and portfolio strategist at New York Life Investments, in a note.
“If Russia goes deeper into Ukraine, the conflict could be longer and the West’s reaction could be more severe. As a result, sanctions could be more biting, with likely consequences for Russia’s political and economic system as well as for ex-Russian companies required to navigate those sanctions,” Goodwin said.
“Higher commodity prices and slower growth could have a meaningful impact on the global economy, including emerging market economies and by making the Fed’s job even more difficult,” the money manager said.
The continuing geopolitical tensions between Moscow and Kyiv suggest that volatility will continue to color the investment landscape.
Some strategists were advocating for putting the recent downturn in the market into perspective.
Investors “need to ask themselves ‘will stock markets be higher than this when I retire? Looking at financial market history, the answer is probably ‘yes’, if they have a decade or more ahead of them,” said Nigel Green of financial advisory and asset management firm deVere Group.
Meanwhile, a more infectious subvariant of omicron, BA.2, has surged to account for more than a third of global COVID-19 cases, adding to the debate about whether countries are ready for full reopening, and contributing to concerns about the broader economic rebound taking hold.
The geopolitical risks and worries about COVID have investors wrestling with the outlook for the business environment, with the Federal Reserve set to embark on a rate-raising cycle, starting as soon as next month, to tamp down surging inflation.
Which companies are in focus?
Shares of Kodiak Sciences Inc. KOD were down over 80% Wednesday after the biopharmaceutical company said a Phase 2b/3 trial of its treatment for age-related macular degeneration failed to meet its primary efficacy endpoint.
Nucor Corp. NU said Wednesday that Chief Financial Officer Jim Frias will retire, after 12 years in the role and 31 years at the steelmaker. Its stock was down more than 10%.
TJX Cos. TJX stock sank 5.2% Wednesday after the off-price retailer, and parent of TJ Maxx, reported fourth quarter profit and sales that missed expectations.
Shares of Lowe’s Companies LOW bounced 2.9% after the home improvement retailer reported fiscal fourth-quarter profit and sales that beat expectations, and provided an upbeat full-year earnings outlook.
Virgin Galactic Holdings Inc.’s
stock rallied 6.5% on Wednesday after the company reassured investors it was on track to fly space tourists this year and to ready its next generation of spaceships.
Shares of online retailer Overstock.com
were trading 27% higher after the company beat earnings expectations.
How are other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y rose 1.9 basis points to around 1.97%, pulling back after approaching 2%. Yields and debt prices move opposite each other.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.2% at 96.187.
Bitcoin BTCUSD rose 2% to $38,027.
Oil futures rose, with West Texas Intermediate crude CL00 up 0.2% to close at $92.10 a barrel. Gold GC00 for April delivery picked up 0.2% to settle at $1,910.40 an ounce, marking the highest settlement for a most-active contract since January of 2021, according to FactSet.