US stocks and global stock indices fell as investors worried about Russia’s intensifying military campaign in Ukraine.
The Dow Jones Industrial Average fell 524 points, or 1.6%, in morning trading. The S&P 500 fell 1.8% and the Nasdaq Composite fell 2.3%. Nine of the 11 S&P 500 sectors were in the red, with only energy and utilities companies advancing.
A strong job count early on Friday was not enough to lift the major indexes. Many investors remained focused on Russia’s escalating military campaign and tried to gauge how harsh Western sanctions against Russia will hurt economic growth. The invasion and rising commodity prices could fuel further inflation at a time when prices have already reached their highest level in 40 years.
New data on Friday showed the United States added 678,000 jobs in February, more than the 440,000 expected by economists polled by The Wall Street Journal. The Federal Reserve signaled it was on track for a quarter-percentage-point interest rate hike at its March meeting, removing some short-term interest rate uncertainty. .
“The jobs report was strong,” said Amy Kong, chief investment officer at Barrett Asset Management. But “that doesn’t necessarily change the Fed’s position,” she said.
In bond markets, the yield on the benchmark 10-year US Treasury fell to 1.710% from 1.843% on Thursday. Bond yields swung wildly throughout the week as investors watched the Russian invasion, comments from Federal Reserve Chairman Jerome Powell, and economic data.
Bitcoin prices have dropped to around $40,700 in recent trades.
Rising oil prices and the prospect of slowing economic growth have also pushed investors towards traditionally safer investments such as government bonds. Bond yields fall as prices rise. The pancontinental Stoxx Europe 600 index fell 2.8% to trade near its lowest level in almost a year, reflecting fears that Europe will bear the brunt of the economic fallout from the Russian crisis. Ukrainian.
“The United States is less vulnerable to the Russia-Ukraine crisis than what you would see in Europe,” said Seema Shah, chief strategist at Principal Global Investors. Right now, she said, “the market is watching [the situation] and say that the US economy is strong.
European banking stocks were particularly affected on Friday. Societe Generale lost around 9.5% after the French lender said on Thursday that its exposure to Russia stood at 18.6 billion euros, or more than $20 billion, at the end of 2021. Italian bank UniCredit fell about 13.6%. Meanwhile, Uniper,
a major German energy company that owes around 950 million euros to the Russian company behind the Nord Stream 2 gas pipeline, fell 12%.
Friday’s moves end a haywire week for global markets, with giant swings between currencies, commodities and stock markets around the world. Many traders were struggling to understand the impact of the sanctions and the subsequent changes made by stock exchanges and financial firms around the world.
The New York Stock Exchange halted trading in three Russia-linked exchange-traded funds, following a similar move with Russian stocks listed on the NYSE earlier this week. Russia’s central bank kept Moscow’s stock market largely closed for a fifth straight day, shielding local stocks from a potential selloff.
The Russian ruble fell again, with the currency losing 2.2% against the greenback, trading at 112.53 per US dollar. The U.S. dollar gained, with the WSJ Dollar Index, which measures the currency against a basket of 16 others, up 0.6% to trade near its highest level since July 2020. Meanwhile, the euro continued its recent slide.
Global equity, bond, currency and commodity markets have seen dramatic swings this week. A sharp rise in oil prices, in which West Texas Intermediate crude briefly topped $116 for the first time since 2008, raised concerns about stagflation, a combination of muted economic growth and inflation.
“It’s starting to look a bit like stagflation,” said Anwiti Bahugana, senior portfolio manager at Columbia Threadneedle. “We have inflation lasting longer and growth slowing.”
Analysts at Goldman Sachs Group said on Thursday that rising oil and gas prices were the “key inflation risk for the United States” and that rising commodity prices threatened economic growth. Every 10% increase in crude oil prices can reduce GDP growth, they said, as consumers reduce spending due to rising gasoline prices.
On Friday, first-month Brent crude oil futures, the global benchmark, rose 3.2% to $114.03 a barrel.
Russian bombings in southern Ukraine, which sparked a fire at a nuclear power plant, heightened investor fears on Friday morning over Moscow’s tactics and worries about a nuclear disaster. However, officials said the fire did not affect critical equipment, alleviating concerns about damage to the reactor.
Despite the volatility, New York stocks have weathered the conflict relatively well. All three major US indexes are up 2% or more since Russia invaded Ukraine last week. Still, the trade has become more choppy in recent days.
In morning trading in New York, Smith & Wesson Brands fell 19% after the gun maker said sales fell more than 30% during the holiday quarter. Gap gained about 10% after the clothing retailer reported better-than-expected results.
Asian stocks fell, partly mirroring Thursday’s action on Wall Street, where tech stocks sold more than the broader market and U.S.-listed Chinese companies stumbled.
Japan’s Nikkei 225 closed down 2.2% on Friday. Hong Kong’s benchmark Hang Seng index fell 2.5% to its lowest close since March 2020. In mainland China, the CSI 300 index fell 1.2% to its lowest close. low since July 2020.
—Joe Wallace and Alexander Osipovich contributed to this article.
Copyright ©2022 Dow Jones & Company, Inc. All rights reserved. 87990cbe856818d5eddac44c7b1cdeb8