Source NY Post
NEW YORK, U.S.--US stocks mounted a stunning comeback Thursday after investors appeared to become slightly less fearful — at least for now — about the economic fallout of Russia’s invasion of Ukraine.
The Dow Jones Industrial Average motored ahead to close the day up 92 points, or 0.28 percent, after falling by more than 700 points at the opening bell.
Tech stocks made a particularly dramatic comeback, with the tech-heavy Nasdaq index rising by more than 3.3 percent after starting the day down a similar amount. The S&P 500, the broadest index of the US stock market, rose 1.5 percent.
“Russia invading Ukraine has added to an already tense year, with investors selling first and asking questions later,” Ryan Detrick, the chief market strategist at LPL Financial, told Bloomberg.
Whether the US economy will be seen by investors to be on a solid footing over the long term is an open question: Growth is strong, but so is inflation, with prices stuck at 40-year highs.
That’s why oil prices that rose sharply in the wake of Russia’s invasion initially spooked markets: US benchmark prices for oil briefly rose to $100 a barrel, but settled down just above $92 after President Joe Biden detailed sanctions on Russia, but said officials would try not to harm the US economy when implementing them.
Earlier in the day, Brent crude oil prices exceeded $100 per barrel in London for the first time since 2014 and the CBOE Volatility index, tracked as a measure of investor anxiety and known as Wall Street’s “fear gauge,” surged as high as 37.00, its highest since Jan. 26.
“The US economy is not walled off from Russia’s invasion of Ukraine,” Bankrate senior economic analyst Mark Hamrick said.
The beginning of hostilities also roiled the cryptocurrency market before it retraced its losses earlier in the day. Bitcoin fell nearly 6 percent in early New York trade before ending the day up 3.1 percent to approximately $35,872, while Ethereum dropped about 9 percent before retracing its losses to trade up 2.3 percent late in New York.
While stocks were able to gain their composure, there’s a big question about how long they’ll be able to keep calm and carry on if the situation in Ukraine becomes protracted.
“Sentiment, broadly, is in the dumps,” Craig Erlam, senior market analyst at OANDA, told Reuters.
President Biden and other Western leaders have vowed to respond to the full-fledged Russian military operation against Ukraine with crippling sanctions. NATO Secretary-General Jens Stoltenberg decried Russia’s incursion as a “brutal act of war.”
The US and other nations implemented initial sanctions on Russia after Russian President Vladimir Putin recognized two breakaway pro-Moscow regions of Ukraine as independent.
Earlier this week, Goldman Sachs analysts warned an escalated military conflict and resulting sanctions could cause the S&P 500 to plummet 6 percent from last Friday’s close.
Tech stocks could be hit particularly hard during the selloff as investors look to shed riskier assets, Wedbush analyst Daniel Ives warned.
“With many high profile cyber security attacks coming from Russia over the past few years, it’s a matter of when not if this increased cyber warfare activity kicks into the next gear,” Ives said in a note to clients.
Shares of major US banks, including JPMorgan Chase, Bank of America and Goldman Sachs, opened lower. Meanwhile, defense stocks, including Lockheed Martin and Raytheon, were trading higher.
Investors will be tracking whether the Russia-Ukraine conflict impacts the Federal Reserve’s plans to tighten monetary policy as it looks to cool surging inflation. The central bank is expected to hike interest rates for the first time in three years in March.
Meanwhile, overseas, markets were hammered: The FTSE 100 in London fell 3.1 percent after Europe awakened to news of explosions in the Ukrainian capital of Kyiv. The CAC 40 in Paris lost 4 percent.
And Moscow’s stock exchange briefly suspended trading on all its markets on Thursday morning. After trading resumed, the ruble-denominated MOEX stock index tumbled more than 20 percent and the dollar-denominated RTS index plunged by more than a third.
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