U.S. stocks extended losses early Thursday as geopolitical tensions between Russia and Ukraine persisted. Investors also continued to weigh new insight on the Federal Reserve's plans to tighten monetary policy, a higher-than-expected fresh read on weekly unemployment data, and another onslaught of corporate earnings.
The S&P 500 dipped 0.72% to 4,442.94, while the Dow Jones Industrial Average ticked down 0.66% to 34,702.72. The Nasdaq Composite was down 0.88% to 14,000.31. In the previous session, Wall Street's main indexes rebounded from steep losses after the Federal Reserve’s latest meeting minutes came in clear of any mention the central bank would authorize a 50 basis point rate hike in March.
Traders face a fresh headwind from geopolitical tensions between Russia and Ukraine. Fears that the Kremlin would green light a move to force in on its neighboring country have mounted in recent weeks on existing central bank worries due to the potential of military action to exacerbate inflation and spur other economic disruptions.
"Markets continue to watch events in Ukraine, cycling back and forth between risk-on with the lessening of tensions and risk-off as tensions increase," Independent Advisor Alliance Chief Investment Officer Chris Zaccarelli said in a note. "This morning markets are concerned about the Russian troop buildup and a lack of trust in Putin’s declaration that they are beginning to remove troops from the region."
Markets rose Tuesday on false reports Russia withdrew some troops from the Ukrainian border, but fears of imminent military action have since been renewed after NATO officials said Russia was continuing its military buildup. The Biden administration said Russia has added as many as 7,000 military personnel to Ukraine’s border.
“We have excellent intelligence and if the Russians in fact are removing those troops, we will see it,” John Ed Herbst, former U.S. ambassador to Ukraine, told Yahoo Finance Live on Tuesday.
Insight into the Fed’s last policy-setting meeting Wednesday served as relief for investors who in recent weeks have grappled with the prospect central bank officials could scale up their hiking cycle on a string of recent red-hot inflation prints and stronger-than-expected jobs data.
The minutes indicated policymakers were weighing a near-term increase on short-term borrowing costs and would determine the timing of their balance sheet reduction process at imminent meetings but did not suggest a 50 basis point hike was on their agenda.
“With markets signaling the Fed’s latency on monetary policy action is a growing concern, investors were looking for any clues in the Fed minutes that allude to more aggressive policy changes in the near future,” Allianz Investment Management senior investment strategist Charlie Ripley said in a note. “In markets, timing is everything, and the delayed reaction from the Fed has investors convinced that aggressive policy tightening is on the horizon.”
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