Economy News

US stocks take a hit as Ukraine crisis stokes fear

The Ukraine crisis has added to uncertainty about the path of the US Federal Reserve’s tightening plans to fight inflation.

United States stocks slid on Thursday, with the S&P 500 marking its biggest daily percentage drop in two weeks, as investors shifted to defensive sectors and safe havens such as bonds and gold while geopolitical tensions between Washington and Russia over Ukraine flared.

After Ukrainian forces and pro-Moscow rebels traded fire in eastern Ukraine, US President Joe Biden said there was every indication Russia was planning to invade in the next few days and was preparing a pretext to justify it.

Russia accused Biden of stoking tensions and released a strongly worded letter saying Washington was ignoring its security demands and threatening unspecified “military-technical measures”.

On Wall Street, the growth-oriented technology and communication services sectors were among the hardest hit. Financials also declined as US Treasury yields moved lower.

Developments in Ukraine have added to uncertainty about the path of the US Federal Reserve’s tightening plans to fight inflation.

“There’s a lot of nervousness out there and as we approach the weekend nothing’s been settled between Russia and Ukraine,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.

“The continued weakness, especially in the growth names, is indicative of elevated nervousness and sellers continuing to swamp buyers in just about every stock.”

The defensive utilities and consumer staples sectors were Wall Street’s only advancers, with staples getting a lift from a 4.01 percent jump in Walmart after it posted record holiday sales.

The Dow Jones Industrial Average fell 622.24 points, or 1.78 percent, to 34,312.03; the S&P 500 lost 94.75 points, or 2.12 percent, to 4,380.26; and the Nasdaq Composite Index dropped 407.38 points, or 2.88 percent, to 13,716.72.

The drop for the Dow was the biggest daily percentage decline since November 30, while the Nasdaq’s decline was its largest percentage fall since February 3.

With the end of earnings season on the horizon, chipmaker Nvidia Corp tumbled 7.51 percent as flat gross margins and concern about its exposure to the crypto market overshadowed an upbeat current-quarter revenue forecast, and helped give the Philadelphia Semiconductor index its first daily decline this week.

Tripadvisor Inc lost 2.50 percent after the hotel search website operator posted a surprise fourth-quarter loss. Albemarle Corp ALB.N plunged 19.91 percent as the lithium producer forecast downbeat annual earnings.

As risk aversion pushed bond yields lower, big banks including JPMorgan Chase, Morgan Stanley and Bank of America all lost ground. Goldman Sachs and Wells Fargo fell even after positive outlooks from the lenders.

Among other big movers, DoorDash Inc shot up 10.69 percent after it reported upbeat quarterly revenue as food delivery demand showed no sign of slowing.

SOURCE: REUTERS

On Wall Street, the growth-oriented technology and communication services sectors were among the hardest hit [File: Lucas Jackson/Reuters]

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