[New York Stock Market] Investor Sentiment Frozen by Russian Nuclear Plant Attack... Nasdaq Falls 1.66%

[Image source=Reuters Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] On the 4th (local time), the US New York stock market plunged across the board as investment sentiment froze due to the aftermath of Russia's attack on the Zaporizhzhia nuclear power plant in Ukraine. The Dow Jones Industrial Average, composed of blue-chip stocks, continued its decline for the fourth consecutive week.

On Friday at the New York Stock Exchange (NYSE), the Dow Jones Industrial Average closed at 33,614.80, down 179.86 points (0.53%) from the previous session. The S&P 500, centered on large-cap stocks, fell 34.62 points (0.79%) to 4,328.87, and the tech-heavy Nasdaq dropped 224.50 points (1.66%) to close at 13,313.44.

Investors focused on the geopolitical risks surrounding Ukraine. The news that Russian forces attacked Ukraine's largest nuclear power plant in Europe caused risk assets like stocks to slide. The Chicago Board Options Exchange (CBOE) Volatility Index (VIX), known as Wall Street's "fear index," rose nearly 5%, approaching the 32 level.

By sector, travel stocks showed weakness. United Airlines' stock price fell more than 9% from the previous session. Delta Air Lines and American Airlines also dropped 5.6% and 7.1%, respectively. Carnival closed down 5.69%. Financial stocks that could benefit from interest rate hikes, such as Bank of America (-3.62%), American Express (-3.8%), and JPMorgan Chase (-2.8%), also showed weakness.

Technology stocks were also sluggish. Tesla closed down 0.12% despite news that its German Gigafactory received conditional approval from German environmental authorities. Apple fell 1.84%, and Microsoft dropped 2.05%. These companies decided to suspend new product sales and services in Russia. Nvidia slid 3.28%. Semiconductor stock Micron fell more than 8%, and Rivian (-6.91%) and Nikola Motor Company (-8.03%) also underperformed. Coupang closed down a staggering 17.16%.

On the other hand, energy stocks performed well due to the sharp rise in international oil prices. Occidental Petroleum surged more than 17%. ExxonMobil rose 3.76%, and Diamondback Energy increased 1.5%. Additionally, Walmart and UnitedHealth also rose 2.7% each.

Geopolitical risks surrounding Ukraine caused oil prices to surge again. On the New York Mercantile Exchange (NYMEX), April delivery West Texas Intermediate (WTI) crude oil closed at $115.68 per barrel, up 7.4% ($8.01) from the previous day. This is the highest closing price since September 22, 2008. WTI surged more than 26% just this week.

In the bond market, the US 10-year Treasury yield fell to the 1.74% range. A decline in Treasury yields indicates a rise in the price of safe-haven assets like government bonds. The spread of war fears due to the nuclear plant attack also pushed gold prices higher. On the New York Commodity Exchange, April delivery gold closed at $1,966.60 per ounce, up 1.6% ($30.70).

The employment data released that day showed strength. The US Department of Labor announced on the 4th (local time) that nonfarm payrolls increased by 678,000 in February, far exceeding the market forecast of 423,000. The Labor Department stated, "This is the largest increase since July last year." This is interpreted as the labor market regaining momentum as the impact of the Omicron variant of COVID-19 subsides. The unemployment rate fell to 3.8%, the lowest level since the pandemic.

With solid employment data, the US Federal Reserve's (Fed) plan to raise interest rates in March is expected to gain momentum. Mike Fratantoni, Chief Economist at the Mortgage Bankers Association, evaluated, "Despite market volatility caused by the Ukraine situation, recent remarks by Fed officials reaffirm that the Fed still plans to raise rates in March."

On the same day, Charles Evans, President of the Federal Reserve Bank of Chicago, appeared on CNBC and expressed concerns that small businesses could be hit by soaring inflation. He criticized the current monetary policy, saying, "We need to move monetary policy more firmly toward neutrality by the end of this year to respond more strongly to inflation."

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