[New York Stock Market] Reversal to Rise Amid 'Ukraine Fear' Plunge... Nasdaq Up 3.34%

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Following the news of Russia's invasion of Ukraine, the major indices of the U.S. New York stock market, which had been sliding one after another, reduced their losses in the late session on the 24th (local time) and eventually closed higher. The tech-heavy Nasdaq index experienced a rollercoaster session, plunging more than 3% intraday before closing up over 3% for the day.

Despite ongoing anxiety due to geopolitical risks, the comment by Russian President Vladimir Putin that he "does not want to damage the global economic system" is evaluated to have somewhat eased the frozen investor sentiment.

On this day at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,223.83, up 92.07 points (0.28%) from the previous session. The large-cap S&P 500 index rose 63.20 points (1.50%) to 4,288.70, the tech-heavy Nasdaq index closed up 436.10 points (3.34%) at 13,473.59, and the small-cap Russell 2000 index also increased by 51.22 points (2.63%) to 1,995.34.

Investors focused on the news late the previous night that Russia had launched simultaneous invasions in Ukraine. As a result, risk-asset aversion grew in the market, causing the stock market to plunge throughout the morning session, with a pronounced shift toward safe-haven assets. The Dow initially dropped more than 800 points, while the S&P 500 and Nasdaq indices fell by 2-3%. However, from the afternoon, starting with the Nasdaq, the fear surrounding Ukraine eased, and a gradual buying of undervalued stocks began to be confirmed.

By individual stocks, tech shares showed strength. Tesla closed up 4.81% from the previous session, reclaiming the 800-dollar mark. Apple (1.52%), Nvidia (6.08%), Microsoft (5.11%), Meta Platforms (4.58%), and Amazon.com (4.51%) also showed gains. Intel and Netflix rose by about 4% and 6%, respectively. Energy and defense stocks also increased.

U.S. President Joe Biden announced additional sanctions against Russia in a public address regarding Russia's invasion of Ukraine in the afternoon. The main points include controlling exports of high-tech products such as semiconductors to Russia and adding four major Russian banks to the sanctions list. This measure followed President Putin's announcement the previous night of a special military operation in the eastern Donbas region of Ukraine, which was immediately followed by missile strikes on airports near Kyiv and major cities.

President Putin justified Russia's military operation in Ukraine as an unavoidable measure. He also added, seemingly mindful of additional Western sanctions, that he "does not want to damage the global economic system." He explained that Russia is also part of the global economy.

With geopolitical risks prominent, the 10-year Treasury yield fell to the 1.84% range before recovering losses to around 1.96%. The decline in Treasury yields indicates a rise in prices of Treasuries, a representative safe-haven asset. Gold futures rose from the previous session, surging to $1,976.50 per ounce before falling below the $1,900 level. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as the fear index, reached an intraday high of 37.79, close to the yearly peak of 38.94, but settled around the 30 level after market close.

Due to the geopolitical risks surrounding Ukraine, there is an assessment in the market that the U.S. Federal Reserve (Fed) is less likely to pursue aggressive tightening. According to the Chicago Mercantile Exchange (CME) FedWatch, the federal funds (FF) futures market reflects a 9.5% chance of a 0.5 percentage point rate hike by the Fed in March. The probability of a 0.25 percentage point increase has risen to the 90% range.

Cash Bostian, Chief Economist at Oxford Economics, expressed concern that "the worst-case scenario of Russia invading Ukraine shocks the stock and oil markets." He said, "It will have negative effects on the European economy and also slow U.S. growth," adding, "Facing uncertainty, the Fed is likely to limit the March rate hike to just 0.25 percentage points."

U.S. economic indicators released on this day showed improvement. The preliminary estimate of the U.S. fourth-quarter (October-December) Gross Domestic Product (GDP) showed an annualized increase of 7.0% compared to the previous quarter. This figure exceeded the flash estimate of 6.9% growth and met market expectations.

The number of weekly initial jobless claims in the U.S. was recorded at 232,000, down 17,000 from the previous week. The Chicago Federal Reserve Bank's January National Activity Index (NAI) rose to 0.69 from 0.07 in the previous month.

International oil prices surged intraday due to Russia's invasion of Ukraine but later calmed somewhat. On the New York Mercantile Exchange, April West Texas Intermediate (WTI) crude oil closed at $92.81 per barrel, up 71 cents (0.8%) from the previous session. WTI prices rose more than 9% intraday, reaching $100.54 per barrel. This is the first time WTI prices have exceeded $100 per barrel since 2014. April Brent crude prices also surged to $105.75 intraday but fell below $100 at the close.

President Biden's announcement of possible strategic petroleum reserve releases depending on the situation during the sanctions announcement is seen as easing supply concerns. According to the U.S. Energy Information Administration (EIA), crude oil inventories for the week ending on the 18th increased by 4.514 million barrels from the previous week, totaling 416.022 million barrels.

This content was produced with the assistance of AI translation services.