The stock market was selling off Friday amid concerns that Russia could invade Ukraine could happen “any day now.”
Those were the words of National Security Adviser Jake Sullivan, and they helped sink a market that was already slipping on concerns about inflation, the Federal Reserve and consumer sentiment. In afternoon trading, the
Dow Jones Industrial Average
had dropped 487.89 points, or 1.4%, while the
had fallen 1.9%, and the Nasdaq Composite had slumped 2.7%.
Markets had already been on edge after Thursday’s inflation report, which showed prices rising at a faster clip than expected in January. With markets unable to pinpoint when inflation will peak, the idea that the Fed may raise rates by 50 basis points in March, rather than 25 basis points, now seems highly plausible. There’s a 46.3% chance of a 50 basis point hike at the Fed’s next meeting, according to the fed funds futures market.
Yesterday’s hot [consumer-price index] numbers are likely to keep investors guessing in terms of what the Fed has planned for rates over the next several quarters,” wrote Michael Sheldon, chief investment officer of RDM Financial Group.
Then came the poor consumer feeling result. The University of Michigan’s consumer sentiment survey fell to 61.7 in February, the lowest level in a decade and below expectations for 67.5—and inflation is being blamed for the unhappiness. “Consumers are really unhappy with the economy,” wrote Bill Adams, chief economist at Comerica bank.
But they took a back seat to the news that Russia was preparing to invade Ukraine—for real this time. National Security Adviser Sullivan was clear that no decision has been made just yet, the signs are pointing to an invasion soon. The US and UK urged their citizens to leave the country within the next 48 hours.
Russia-related equities dropped, including the
VanEck Russia ETF (RSX), which has fallen 7.3%, while West Texas Intermediate Crude oil rose more than 4% to over $93 a barrel. Russian aggression could be met with sanctions on the country’s oil from the US or Europe, which might restrict the oil supply. That’s the last thing the stock market needs, with inflation already starting to dent the consumer’s willingness to spend, the Fed likely to raise interest rates, and the price of oil already moving higher this year.
Still, reactions to geopolitical events, as long as they’re not prolonged, are usually recovered fairly quickly, says LPL Financial chief market strategist Ryan Detrick. “As devastating as a major conflict could be between Russia and Ukraine, the truth is stocks likely will be able to withstand the geopolitical struggle,” he writes. “In fact, looking back at other major geopolitical events throughout history reveals stocks usually take them as a nonevent.”
We can only hope.
Here are five stocks on the move Friday:
Zillow (ticker: ZG) jumped 12% following the online real estate services company’s better-than-estimated quarterly results, released late Thursday. The group also detailed positive progress on exiting its embattled iBuying business, selling off inventory more quickly and at better prices than expected.
British American Tobacco (BTI) moved 4.3% higher, with the tobacco giant’s London-listed stock up 0.6%, after the group reported results. Revenue beat estimates even as full-year earnings fell short; the company also announced a £2 billion ($2.7 billion) share buyback program this year.
Affirm (AFRM) stock fell 21% after the company reported a loss of 57 cents a share, wider than the expected loss of 22 cents a share, on sales of $361 million, above expectations for $329 million.
Expedia Group (EXPE) stock gained 4% after the company reported a profit of $1.06 a share, beating estimates of 60 cents a share, on sales of $2.8 billion, above expectations for $2.3 billion.
Texas Instruments (TXN) stock fell 2.8% after getting downgraded to Hold from Buy at Edward Jones.