“While we’re still being warned that a Russian invasion is highly likely, the meeting does offer hope that nothing will happen before then which is bringing some stability in the markets,” Craig Erlam, senior market analyst with OANDA, said Friday in comments emailed to The Post. “We could still see some risk aversion creeping in as we near the close, given how quickly these situations can change.”
Around 2 p.m., the tech-heavy Nasdaq was down 1.2 percent and the S&P 500 index was off .7 percent. The Dow had recovered some ground but remained down 175 points, or 0.5 percent. All three indexes are down 5 percent or more year to date, according to MarketWatch.
The markets often shrug off major geopolitical conflicts, but investors have been keeping a wary eye on the standoff given Russia’s role as one of the world’s biggest energy producers. The crisis could have significant implications for the economy, including worsening already high inflation. President Biden has warned that United States and its allies would respond in the event of a Russian invasion and impose “severe” costs.
Biden will meet with other Western leaders Friday to discus the standoff. U.S. officials obtained intelligence that Russia’s announced military pullback from Ukraine’s border was a ruse to mislead the United States and other world powers. Biden told reporters that the threat of an invasion remains “very high” and could happen within days.
Meanwhile, in Munich, Vice President Harris is set to meet with NATO Secretary General Jens Stoltenberg, representatives of NATO’s three Baltic states and Ukrainian President Volodymyr Zelensky at a major security conference.
Overseas markets were mixed Friday, with Asian indexes mostly negative, led by Hong Kong’s Hang Seng Index, which shed nearly 1.9 percent. European markets moved higher across the board in midday trading, led by France’s CAC 40, which gained 0.7 percent.
In past run-ups to major global conflicts, such as the Gulf War or the wars in Iraq and Afghanistan, volatility has peaked ahead of invasion, according to Wayne Wicker, chief investment officer at MissonSquare Retirement, told The Post.
“It tends to be a pattern where people sell into the uncertainty before a conflict occurs, and then once the conflict takes place markets tend to start to reverse and go higher,” Wicker said. “It’s that uncertainty that gets stock markets kind of shaky.”
Volatility has been rampant thus far in 2022 trading, even without the burgeoning conflict between Russia and Ukraine. A steady drumbeat of economic data has offered frequent reminders that inflation is at its highest level in decades, resulting in surging prices everywhere from the grocery counter to the gas pump. The Federal Reserve has said that rate hikes are imminent, but the timeline for increases in yet unclear. Raising rates is the central bank’s most powerful lever against inflation, but higher rates can also limit business activity, which can hit stocks — especially high-flying companies — hard.
“The market is in ‘wait and see mode’, as investors brace for the Federal Reserve’s next move,” Robert Schein, chief investment officer of Blanke Schein Wealth Management, said Friday in comments emailed to The Post. “Growth stocks continue to struggle and rising interest rates are a headwind to this sector’s profitability, particularly for companies in this space that are trading well above what their earnings are.”
Sentiments had been improving on Wall Street prior to the intensifying global conflict, as the influx of strong corporate earnings and dropping omicron cases inspired confidence that the recovery was still chugging along. But many thorny complications remain, from a vexed labor market to a supply chain in deep distress and a seemingly ceaseless pandemic. Wall Street’s fear gauge, or Cboe’s volatility index, is up 65 percent year to date, according to MarketWatch.
Oil prices wavered Friday before turning positive as investors awaited more news from Ukraine. Brent crude, the international oil benchmark, gained nearly 0.5 percent to around $93.40 per barrel. West Texas Intermediate crude, the U.S. oil benchmark, edged down 0.25 percent to trade around $91.60 per barrel.
Gold, an investor safe haven of times of turbulence, edged about 0.2 percent lower to trade around $1,898.50 per troy ounce.
Government bonds, another safe haven which has also seen incredible pressure amid surging global inflation, swung lower Friday. The yield on the 10-year U.S. Treasury note edged down to 1.925 percent. Bond yields move inversely to prices.
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February 19, 2022 at 12:48AM
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US stock futures waffle after Dow registers its worst day of 2022 - The Washington Post
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