U.S. stocks fell sharply on Tuesday to mark a bleak first day of March on Wall Street as investors weighed intensifying Russian attacks on Ukraine and the impact of Western sanctions on Moscow.
The S&P 500 tumbled 1.55% to 4,306.19, and the Dow Jones Industrial Average plunged nearly 600 points, or 1.77%, to 33,293.96, marking its worst day since Feb. 17. The Nasdaq Composite dropped 1.59% to 13,532.46. Losses also hit the 10-year U.S. Treasury index, which slid to 1.7%. The declines build on the Dow and S&P 500's worst start to year since 2020. The Nasdaq has also recorded its worst January and February since 2009.
Financials led losses on Tuesday, with the XLF experiencing its biggest losses since June 2020, down 3.66%.
Meanwhile, WTI crude oil spiked as much as 10% to top $105 per barrel, marking its highest price since 2014 amid worries around a disruption in the energy sector.
As traders watch the war escalate overseas, in the U.S., they revert their attention back to the Federal Reserve and its plan to lift interest rates as soon as this month.
The worsening crisis in Ukraine has raised bets geopolitical uncertainty could knock the Federal Reserve off course for an aggressive first bump in interest rates. Investors have began pricing in a zero chance of a 50 basis point rate hike in March and minuscule chance of no increase at all.
Sky-high inflation prints month-over-month have previously elevated concerns among market participants that central bank officials will raise short-term borrowing costs more aggressively than expected to mitigate increasing prices, even stoking the possibility of a double interest rate hike of 50 basis points mid-March. But with ambiguity over how the Russia-Ukraine turmoil will pan out and potential economic disruptions, Fed watchers now anticipate the central bank may tread lightly on its rate hike.
Federal Reserve Chair Jerome Powell is scheduled to deliver a monetary policy update before the U.S. House Financial Services Committee on Wednesday and appear in front of Senate Banking Committee members Thursday in meetings that could offer hints on the Fed’s position ahead of its March 16 policy-setting meeting.
“Given the current conflict in the Ukraine, there remains considerable near term uncertainty with central bank intentions,” LPL Financial strategists Lawrence Gillum and Ryan Detrick said in a note, adding that upward pressure on the prices of oil and other commodities and sanctions against Russia could result in broader economic repercussions. “As such, inflationary pressures may remain high particularly as it relates to gas prices.”
Still, LPL has priced in a first hike of 25 basis points this month — for now.
Russia’s economy has been in the limelight this week after a ramp up on penalties by the U.S. and European allies for its invasion of Ukraine rocked the country’s financial system and sent the ruble tumbling 30% on Monday. A trove of multinational companies severing business dealings with the country also mounted to the growing economic pressure on Moscow.
Measures by the U.S. and Europe, including a move to block some Russian banks from the SWIFT payment network and sanctions on the Central Bank of Russia, have already dealt a harder-than-expected blow to the country’s economy, testing a decades-long effort by President Vladimir Putin to make the system sanction-proof.
The U.S., European Commission, France, Germany, Italy, U.K. and Canada set forth a joint statement Saturday booting select Russian banks from the SWIFT messaging system, a network that works to facilitate trillions of dollars in global transactions.
On Monday, the U.S. also barred Americans from conducting business with the Central Bank of the Russian Federation, the National Wealth Fund of the Russian Federations and the Ministry of Finance of the Russian Federation. Western financial institutions are expected to follow suit, with HSBC curbing its dealings with a docket of Russian banks including the second-largest, VTB.
The Russia-Ukraine crisis "is going to create enormous pain and hurt to the Russian economy," Virginia Sen. Mark Warner told Yahoo Finance Live on Monday. "This is a much bigger economic hit than Putin anticipated."
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4:00 p.m. ET: All three major benchmarks plunge to mark turbulent first day of March
Gold (GC=F): +$47.10 (+2.48%) to $1,947.80 per ounce
10-year Treasury (^TNX): -13.2 bps to yield 1.7070%
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12:05 p.m. ET: Stocks plunge as Russia-Ukraine conflict rages
Here were the main moves in markets during midday trading
S&P 500 futures (ES=F): -72.70 points (-1.66%), to 4,301.24
Dow futures (YM=F): -696.50 points (-2.06%), to 33,196.10
Nasdaq futures (NQ=F): -201.44 points (-1.44%) to 13,549.96
Crude (CL=F): +$10.54 (+11.01%) to $1106.26 a barrel
Gold (GC=F): +$34.50 (+1.82%) to $1,935.20 per ounce
10-year Treasury (^TNX): -14.44 bps to yield 1.695%
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11:25 a.m. ET: Construction jumps during January despite higher costs
U.S. construction spending jumped in January amid strong outlays on single-family homebuilding and private nonresidential structures.
The Commerce Department reported a 1.3% increase in construction spending and an upward revision on December data that reflected construction outlays rose 0.8% instead of the 0.2% initially reported.
Bloomberg consensus data showed economists were anticipating a 0.1% uptake in spending.
Homebuilding remains under pressure from higher costs on building materials despite the surge in January. The National Association of Homebuilders said last month that building material production snafus were inflating construction prices and delaying projects.
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10:25 a.m. ET: US manufacturing activity regains traction
Manufacturing activity in the U.S. picked up more than expected during the month of February as COVID-19 infections fell. Hiring at factories, however, slowed, worsening supply chain disruptions and placing upward pressure on input prices.
The Institute for Supply Management (ISM)'s latest print on its index of national factory activity rose to a reading of 58.6 last month from 57.6 in January, which marked the lowest figure since November 2020.
A reading above 50 points to an expansion in manufacturing, which accounts for 11.9% of the U.S. economy. Economists surveyed by Bloomberg anticipated a print of 58.0.
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10:00 a.m. ET: Kohls rises on better-than-expected outlook
Kohl’s Corp. (KSS) missed analyst estimates for the fourth quarter but reported an upbeat revenue outlook for 2022 and said it will "build its momentum" this year.
The company saw a 13% slip in fourth-quarter net income to $299 million for the quarter ended Jan. 29, 2022, down from $343 million in the same period a year ago.
While down on a quarterly basis, net annual income jumped to $938 million, compared to a loss of $163 million in the 2020 due to the pandemic. Earnings per share reached a record high of $7.33 in 2021.
Meanwhile, the company said it was engaging with unsolicited bidders. Kohls has been under pressure from activist investors including Macellum Advisors and Engine Capital to raise its shareholder value and improve financials, and also urged to consider spinning the company off into separate online and brick-and-mortar businesses, calls the retailer rejected.
Shares of Kohls were up 4.48% to $58.11 a piece as of 9:59 a.m. ET.
SAN RAFAEL, CALIFORNIA - JANUARY 24: The Kohl's logo is displayed on the exterior of a Kohl's store on January 24, 2022 in San Rafael, California. Retailer Kohl's has received an unsolicited $9 billion takeover offer from activist investor Starboard Value through Acacia Research Corp. The offer is for $64 per share compared to the last closing price of $46.84 per share on Friday. (Photo by Justin Sullivan/Getty Images) ·Justin Sullivan via Getty Images
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9:47 a.m. ET: Target surges at start of trading after earnings beat
Shares of Target (TGT) jumped 14% at open after the company reported a better-than expected outlook for its annual adjusted earnings per share.
"The quarter was driven by traffic. So that means consumers voted with their with their feet and their clicks and picked Target more often. So that's an incredibly healthy sign for for our business," Target CFO Michael Fiddelke said on Yahoo Finance Live.
Target was up 11.42% to trade at $222.59 per share as of 9:47 a.m. ET.
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9:30 a.m. ET: US stocks hold steady as investors continue to monitor Russia, Ukraine
Here's how markets opened for Tuesday's trading session:
S&P 500 futures (ES=F): -11.34 points (-0.26%), to 4,362.60
Dow futures (YM=F): -169.64 points (-0.50%), to 33,722.96
Nasdaq futures (NQ=F): -46.40 points (-0.34%) to 13,705.00
Gold (GC=F): +$8.80 (+0.46%) to $1,909.50 per ounce
10-year Treasury (^TNX): -14.7 bps to yield 1.822%
White House Press Secretary Jen Psaki listens as Deputy National Security Advisor for international economics Daleep Singh gives an update on sanctions during a daily press briefing on the U.S. response after Russia launched a massive military operation against Ukraine, at the White House in Washington, U.S., February 24, 2022. REUTERS/Leah Millis ·Leah Millis / reuters
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
