Stock Market Today: Stocks Fall as Russian War on Ukraine Intensifies

Here are the numbers: The

S&P 500
dropped 1.6%; the index also closed in a correction Feb, 22. The

Nasdaq Composite
lost 1.6% as well. The

Dow Jones Industrial Average
fell 599 points, or 1.8%.

“Markets are in turn again reflecting this unfortunate unfolding reality with another jump in commodity prices, rally in the dollar, drop in rates and fall in stocks,” wrote Peter Boockvar, chief investment officer of Bleakley Advisory Group.

WTI crude oil gained just over 9% to a bit above $104 a barrel, a new multiyear high. That lands the price at a 41% gain for the year and it could put an even more burdensome strain on consumers, which have already had to confront high inflation. 

Also, members of the International Energy Agency, which includes the U.S., agreed to release 60 million barrels of oil from emergency reserves. That couldn’t do much to bring the price down as oil’s gain picked up steam in the afternoon.

The market moves come as the war shows few signs of ending. Russian rockets are said to have hit the center of the Ukrainian city of Kharkiv, while a miles-long line of tanks was heading toward Kyiv.

What’s more, newly-imposed sanctions on Russian banks could hurt the European economy. Some Russian banks now have limited access to the SWIFT payments system, designed to make international wires of money easier. That means some European banks or other businesses might not get paid in full, or on time, by Russian banks.

Already, two of the five worst performers on the Dow were banks, as markets are concerned that the potential for delayed payments between banks could spread to U.S. banks.

JPMorgan Chase & Co. (ticker: JPM) and

Goldman Sachs Group (GS) declined 3.8% and 3.3%, respectively. 

But if Russia shows no sign of acting more diplomatically, Western countries might have to sanction Russian oil, reducing the global supply of the commodity and lifting the price, which is already underway.

And it isn’t just oil prices surging, as other commodity prices are also soaring. The CBOT wheat contract, for instance, rose more than 5% per bushel. It’s anybody’s guess which commodities out of Russia the West could sanction—and Russia’s economy is centered around commodity sales. 

All of these fears have market participants rushing into safer assets. The price of the 10-year Treasury has risen, sending the yield down to 1.73% from 2% earlier this year. That seems counterintuitive because annual inflation expectations are above 2%, so bond investors should demand a higher return—and they may in the future. But for now, investors prefer to hold less volatile assets that can provide some income while markets for riskier assets are whipsawing around. 

“Until there is some sort of cease fire in Ukraine and the market no longer has to process additional sanctions and those impacts to the global economy, we will see geopolitical money flows continue to dominate the currency and bond markets,” wrote Tom Essaye, founder of Sevens Report Research. 

This all sounds scary — and it is. But there is a silver lining: markets are expecting the Federal Reserve to hike interest rates less aggressively, given the risks to economic growth. 

The fed funds futures market is implying a total of six hikes, down from 7 just weeks ago, in the next couple of years. The probability of a 50 basis point hike in March—rather than a 25 basis point hike—has fallen to 2.2% from 41% a week ago. Meanwhile, the 2-year Treasury yield, which attempts to forecast the benchmark lending rate within the next couple of years, has fallen to 1.34% from a pandemic-era high of 1.61% hit earlier this year. 

The picture was mixed overseas. The pan-European Stoxx 600 fell 2.4% with Germany’s

DAX
down 3.9%. In Asia, Tokyo’s

Nikkei 225
notched gains of 1.2%.

Five stocks that were on the move:

Chevron (CVX) stock rose 4% after the oil major said it would as much as double its share buyback range to $5 billion to $10 billion each year.

Baidu (BIDU) jumped 6.8% after the Chinese tech giant reported fourth-quarter results showing that growth in its cloud-computing and artificial-intelligence businesses offset a wider slowdown in online advertising.

Target (TGT) soared 10% after the retailer posted fourth-quarter profit ahead of analysts’ expectations and issued an upbeat full-year outlook.

Zoom (ZM) stock added 7.4% after the company reported a profit of $1.29 a share, beating estimates of $1.06 a share, on $1.07 billion of sales, above expectations for $1.05 billion. The company also forecast disappointing current quarter sales, projecting $1.07 billion, below analyst’s previous expectation for $1.1 billion. 

Kroger (KR) stock gained 3.3% after getting upgraded to Outperform from Market Perform at Telsey Advisory Group. 

Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com