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Market Snapshot: Dow down 500 points, but stocks trim losses sparked by Russia’s invasion of Ukraine

U.S. stocks plunged Thursday morning as Russia, brushing aside the threat of further Western sanctions, mounted a wide-ranging and long-feared attack on Ukraine.

Russian tanks and troops rolled across the border early Thursday, Ukraine’s government said, accusing Moscow of launching a “full-scale war” after Russian President Vladimir Putin announced a “special military operation” after a months-long military buildup on the country’s borders.

How are stock-index futures trading

The Dow Jones Industrial Average
DJIA,
-2.18%

was down 775 points, or 2.3%, at 32,357. A close below 33,119.69 would put the blue-chip gauge in correction territory, marking a 10% fall from its record close.

The S&P 500
SPX,
-1.60%

was down 95 points, or 2.3%, at 4,130, deepening its fall into correction territory.

The Nasdaq Composite
COMP,
-1.29%

was down 296 points, or 2.3%, at 12,741. A finish below 12,845.95 would leave the tech-heavy index in a bear market, with a fall of at least 20% from its November record finish.

On Wednesday, the Dow industrials fell 464.85 points, or 1.4%, to end at 33,131.76, ending a stone’s throw from correction territory. The S&P 500 fell 1.8%, deepening its stumble into correction territory, while the Nasdaq Composite Index declined 2.6%.

What’s driving the moves?

Wall Street’s tumble follows sharp losses for equities in Asia and Europe, where the Stoxx Europe 600
SXXP,
-3.28%

remained down nearly 4%. Investors seeking safety piled into traditional havens, pushing down yields of government bonds, including Treasurys, boosting the dollar, and rallying gold to its highest level in more than a year.

“Russia’s extensive military operations in Ukraine have roiled the markets,” said Marc Chandler, chief market strategist at Bannockburn Global Forex, in a note. “Although it is hard to consider it a surprise, equities have been crushed and bonds have rallied strongly.”

In a televised address, Putin claimed the operation comes in response to threats coming from Ukraine. He said Russia doesn’t intend to occupy Ukraine and said the responsibility for bloodshed lies with the Ukrainian “regime.” The Russia president also warned other countries that any attempt to interfere would lead to “consequences they have never seen.”

U.S. President Joe Biden promised a new round of sanctions. Leaders of the Group of Seven nations were set to meet Thursday morning to discuss further punitive measures against Moscow. NATO Secretary-General Jens Stoltenberg called the Russian assault a “brutal act of war” and said the North Atlantic Treaty Organization had activated defense plans in the region, The Wall Street Journal reported.

The surge in prices for oil and other commodities were seen stoking fears of stagflation — a combination of persistent inflation and slowing economic growth. That could potentially complicate the path for the Federal Reserve as it prepares to begin lifting interest rates as early as next month, analysts said.

See: Ukraine invasion sends wheat, corn and oil soaring because Russia is a ‘commodity superstore’

Meanwhile, investors are braced for the U.S. and its allies to unveil new sanctions while watching for signs of escalation.

“Should investors be worried? As sad as the human cost is during this event, financial costs tend to be limited,” said Giles Coghlan, chief analyst at HYCM, in emailed comments.

“A glance back at some of the gravest world events in recent history reminds us of this — the bombing of Syria in 2017, the U.S. withdrawal from Afghanistan and the North Korean missile crisis, for example, show us the market reaction to these events can be surprisingly mild,” he said. “Most dips end up being bought, so medium-term buyers can often find good value in these bleak times.”

What are other assets doing?

The 10-year benchmark Treasury note yields BX:TMUBMUSD10Y 1.89%, falling from 1.976% at 3 p.m. Eastern Time rate on Wednesday, as investors sought safe assets. Yields and debt prices move opposite each other.

The dollar, also often viewed as a safe-haven during times of geopolitical unrest, was up 1.2%, as gauged by the ICE U.S. Dollar Index DXY.

Oil prices shot higher, with benchmark U.S. crude CLJ22 and Brent crude BRNJ22, the global benchmark, both trading above $100 a barrel for the first time since 2014. Brent crude remained up 6.6% at $100.30 a barrel, while WTI was 7% higher at $98.54.

Gold GC00 was up 2% at around $1,949.30 an ounce.

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