US stocks opened lower on Thursday as Russia began invading Ukraine. But comments made by President Joe Biden during a speech this afternoon about the conflict quelled some anxiety among investors.
The S&P 500 and NASDAQ Composite Indexes, which opened more than 2% lower, were up 0.25% and 1.89%, respectively, around 2:45 PM ET.
The Dow Jones Industrial Average opened more than 700 points lower on Thursday, losing more than 2% of its value. But at about 2:45 p.m. it was down 268 points, or 0.82%.
Since the invasion of Ukraine by Russian forces late Wednesday night, at least 40 casualties and dozens of injuries occurred in explosions that occurred in major cities, including the capital, Kiev, and the cities of Kharkiv and Odessa.
Biden reiterated that “our forces are not and will not be involved in a conflict with Russia in Ukraine.” But he added that US forces would be sent to other parts of Europe “to protect our NATO allies”.
Biden also announced in a televised address that G7 leaders are limiting Russia’s “ability to do business in dollars, euros, pounds and yen to be part of the global economy,” among other sanctions.
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With inventories low earlier on Thursday, oil prices rose significantly. Crude oil briefly traded at over $105 a barrel, the highest since 2014, but closed below $100 a barrel.
Gold Prices Rise While Bitcoin Falls
Volatile investors are taking the more traditional route, choosing to buy gold instead of cryptocurrency. Gold futures traded on the New York Mercantile Exchange rose more than 0.8% to the highest level since September 2020.
Like gold, cryptocurrency is often viewed as a hedge against inflation and stock market volatility. However, bitcoin prices are down more than 3% as of 1:15pm ET on Thursday. Over the past five days, the cryptocurrency has shed more than 10% of its value.
Ethereum, a cryptocurrency that competes with Bitcoin, has received greater success. It’s down more than 7% over the course of a single day as of 1:15 p.m. ET, according to Coinbase data.
Should You Sell Your Stock With the Russian-Ukrainian Invasion?
While some stocks may look like a bargain during the sell-off, market analysts say investors should proceed with caution, warning that stocks could fall further.
“Since the headlines are disturbing, from an investment perspective, we urge investors not to overreact,” said Keith Lerner, Chief Investment Officer at Trustee Advisory Services.
“Panic selling has generally not been a winning strategy,” he added in a note.
Besides tensions with Russia, the Federal Reserve is considering whether to raise interest rates more aggressively to curb inflation, which has reached a 40-year high. This could lead to a further decline in stocks as higher interest rates mean companies and consumers are paying more to borrow, which could lead to lower corporate profits.
However, analysts say it is crucial to think ahead.
“It is important to recognize that markets tend to eventually recover after geopolitical events, and that pullbacks from corrections tend to be very sharp,” Lerner said.
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What stocks should you buy in the midst of the Russian invasion of Ukraine?
On the flip side, now is the time to consider buying technology stocks, Daniel Ives and John Katsingris, analysts at Wedbush, said in a note.
“While every geopolitical shock event is different and unique, our guide since 2000 has been to use these periods of global chaos to buy into tech winners we view as an oversold method of panic selling.”
Watch out for cyber stocks, Ives and Katsingris said.
They added, “With the significantly higher level of cyber attacks now looming, we believe the additional growth winds of the cybersecurity sector and premium suppliers should be a sector that tech investors are focusing on during this market turmoil.”
Will the Fed hold off on raising interest rates?
At its most recent meeting, the Fed announced that it plans to raise interest rates, which currently stand at levels close to zero, at least three times this year. The first hike is scheduled to go into effect next month.
But the economic risks posed by the Russian conflict to the United States may prompt the Federal Reserve to rethink its timetable for raising interest rates and the levels at which they do so.
“The implications of the evolving situation in Ukraine for the medium-term economic outlook in the United States will also be considered when determining the appropriate pace of accommodation removals,” Cleveland Fed President Loretta Meester said Thursday. mentioned.
Bill Adams, chief economist at Bank of Comica, said in a note that the struggle is not worth the Fed taking a 180-degree aggregate role in raising interest rates.
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Adams added that the invasion makes it “unlikely” that the Fed will raise interest rates by 50 basis points, although it is “still very likely to raise rates by a quarter of a percentage point with US inflation well above target, and the momentum Job growth is strong, and domestic demand is booming.”
It is also worth considering that inflation may slow even without Fed action if the US continues to produce more oil domestically.
This “will limit the rise in oil prices and help economic growth here,” said Brad MacMillan, chief investment officer at Commonwealth Financial Network.
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