By
Steve Muchoki
April 16th, 2024
Russia-Ukraine war-related fears continue to put severe pressure on global stock markets. The US announces a fresh set of sanctions against Russia’s sovereign debt, banks, and high-profile individuals.
On Wednesday, February 23, the US stock indices witnessed another round of heavy correction. The escalated Russia-Ukraine war tensions have pushed the S&P 500 (INDEXSP: .INX) to a fresh new low for 2022.
The S&P 500 ended Wednesday’s closing session 1.8% down to 4,225 levels. This marks a 12% drop since the beginning of 2022. Other indices like the Dow Jones Industrial Average (INDEXDJX: .DJI) also faced a similar correction on Wednesday. The Dow was down 464 points ending the trading at 33,131 levels.
The tech-heavy Nasdaq Composite (INDEXNASDAQ: .IXIC) witnessed an even brutal sell-off plunging 2.57% or 344 points and ending the trading at 13,037 levels. After a strong rally last year, tech stocks have undergone severe correction so far in 2022. All of these top three U.S. stock indices have registered correction for the fourth consecutive day.
With Wednesday’s heavy correction, the Nasdaq Composite has technically entered bear territory. currently, the Nasdaq Composite is 18% down from its November correction.
Yesterday, apart from companies with blownup valuations, fundamentally strong companies also witnessed major corrections. Tech titan Apple Inc (NASDAQ: AAPL) tanked 2.6% while e-commerce giant Amazon.com Inc (NASDAQ: AMZN) fell by 3.6%. Additionally, companies in the retail segment also witnessed major corrections on Wednesday. Edward Moya, senior market analyst with Oanda said:
“Stocks are going to struggle to find direction until financial markets have a clear answer on whether the Russia-Ukraine crisis will have a diplomatic solution or regional warfare”.
Russia-Ukraine War-Related Fears Escalate
The brewing tensions between Russia and Ukraine have brought the two countries to the brink of a full-scale war. Kyiv has declared a state of emergency as Ukraine has warned its citizens against traveling to Russia. Furthermore, the European Union is also holding an emergency meeting as the UK prepares for additional sanctions.
Meanwhile, Russia continues its attacks on the internet infrastructure of Ukraine. On Wednesday, the Ukraine Ministry of Digital Transformation said that it faced another massive DDoS attack that even prevented certain entities from accessing government websites.
The Biden administration is also moving forward with imposing heavy sanctions concerning the building of Russia’s Nord Stream 2 gas pipeline. The first set of sanctions targets Russia’s sovereign debt, its banks, and three high-profile Russian individuals. Speaking on Wednesday, US President Joe Biden said:
“Today, I have directed my administration to impose sanctions on Nord Stream 2 AG and its corporate officers. These steps are another piece of our initial tranche of sanctions in response to Russia’s actions in Ukraine.”
Speaking of the recent market sentiment, Eylem Senyuz, senior global macro strategist at Truist, wrote:
“While uncertainties remain, our work shows that historically military/crisis events tend to inject volatility into markets and often cause a short-term dip, but stocks tend to eventually rebound unless the event pushes the economy into recession. Investor sentiment also suggests the bar for positive surprises is low”.
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