Stocks dropped as investors attempted to gauge the impact of the conflict on the global economy. Close at 4,306. The S&P 500 lost roughly 68 points or 1.6% to close at 4,306. The Dow Jones Industrial Average fell nearly 598 points or 1.8% to close at 4,306. These declines are the latest in a string of market losses that have been occurring after a two month skid for S&P 500.
The markets for oil, commodities and bonds were the most volatile. Russia, one of the largest oil producers in the world, has been a major concern. This latest price increase puts pressure on the persistently high level of inflation, which is threatening households all over the globe.
The benchmark U.S. crude oil price rose 8% to $103.41 a barrel, the highest price since 2014. Brent crude oil, which is the international standard for crude oil, rose 7.1% to $104.97.
An extraordinary meeting of the International Energy Agency’s board resulted in 31 member countries agreeing to release 60,000,000 barrels of oil , half of which will be from the United States Strategic Petroleum Reserve.
In November 2021 President Joe Biden went into the SPR and released 50 million barrels oil to lower gas prices before the busy Thanksgiving holiday. As President Biden prepares for Tuesday’s State of the Union address, the IEA announces the same day.
“Moving forward with this release reflects the magnitude expected disruptions in global energy markets driven because of sanctions on Russia,” Clayton Allen, director and Raad Alkadiri managing director of energy climate & resources at Eurasia Group stated. Analysts stated that disruptions will also emphasize the importance of U.S. production.
Analysts at TD Securities stated that Russia is still very vulnerable to Europe in certain sectors, especially energy. Europe will feel the most severe consequences of the West’s rush to sanction Russia. This is a typical stagflationary shock. Growth and inflation will likely be lower than usual.
Rising oil prices are driving up gas prices in the United States. According to AAA, the national average price for a gallon is $3.61. This is 26 cents more than a month ago and almost a dollar more than a year ago. In some areas of the U.S. prices have risen to $4, data shows.
Russia’s invasion in Ukraine has put additional pressure on agricultural commodity prices. These were already rising due to rising inflation. Corn and wheat prices have risen more than 5% each bushel, and are up over 20% already this year. Ukraine is a major exporter of both crop.
Investors kept putting money in bonds. The 10-year Treasury yield fell sharply to 1.72%, down from 1.83% on Monday. It is now back at the January level. It had risen above 2% in February for the first time since over two years. The 10-year Treasury yield is used for setting interest rates on mortgages, and other types of loans.
The conflict in Ukraine has shaken global markets and raised concerns about economic growth , in light of increasing inflation and central bank plans to raise interest rate. As Russia continues its push into Ukraine’s key cities, the U.S. and its allies are putting pressure on Russia’s financial systems.
After Western countries attempted to block certain Russian banks from accessing a crucial global payment system, the Russian Ruble fell to an all-time low. The U.S. Treasury Department also announced additional sanctions against Russia’s central banks Monday.
These developments put Russians at risk of higher prices and reduced foreign travel.
Numerous companies announced plans to pull out of ventures located in Russia or to cease operations in Ukraine because of the conflict. Visa and Mastercard stated that they are blocking Russian banks in compliance with U.S. sanctions.
In an attempt to stabilize the ruble’s fall and stop banks from running, the Russian central bank raised its key rate to 20%. It was previously 9.5%. Russia’s stock exchange remained closed Tuesday.
Fed chief speaks
Investors closely monitor developments in Ukraine and await the latest economic updates from the Fed. The testimony of Fed Chair Jerome Powell, which is scheduled to appear before Congress this week, could provide clues about the future path for raising interest rates. The Fed will release a report on Friday that will show whether the strength of the U.S. job market in February continued, giving it more flexibility to raise rates.
Many stocks saw big earnings moves. Target rose 10.5% following strong fourth-quarter financial results. Target also announced that it will invest up $5 billion in physical stores, remodels, and other initiatives this year. After reporting positive earnings, Workday saw a 6.8% increase.
