U.S. stock gauges turned lower late-morning Wednesday, with the S&P 500 index deepening its slide into correction territory, in the wake of Russian President Vladimir Putin’s decision to order troops to breakaway regions of Ukraine, escalating tensions and raising fears of a full-scale invasion.
Equity bourses are 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
receded 123 points, or 0.4%, at around 33,475.
S&P 500 index
was trading 25 points, or 0.6%, lower to around 4,279, with consumer discretionary
down 1.8%, and utilities
leading losses, both off about 0.8%, among the benchmarks 11 sectors.
Nasdaq Composite Index
fell 130 points, or 1%, at about 13,250.
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?
Gains petered out late morning Wednesday, morphing into losses, as hope that developments in Ukraine wouldn’t be as damaging to global economies, gave way to anxieties about the state of inflation and its impact on monetary policy.
Investors expressed uncertainty about Russia’s incursion in Ukraine. Market participants have been on edge after Russian President Vladimir Putin ordered forces into separatist regions of eastern Ukraine on Monday, raising fears that an 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 Laura 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.
But “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,” Nigel Green of financial advisory and asset management firm deVere Group, said.
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 8.2% 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% after the home improvement retailer reported fiscal fourth-quarter profit and sales that beat expectations, and provided an upbeat full-year earnings outlook.
How are other assets faring?
The yield on the 10-year Treasury note TMUBMUSD10Y rose 1.3 basis points to around 1.96%, 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 virtually unchanged at 96.064.
Bitcoin BTCUSD rose 2% to $38,027.
Oil futures rose, with West Texas Intermediate crude CL00 for March delivery up 1% at $92.85 a barrel. Gold GC00 for April delivery picked up 0.1% to $1,909.60 an ounce, after it marked the highest settlement for a most-active contract since June, according to FactSet.