The Kremlin’s placement of troops in eastern Ukraine, coupled with US sanctions on Russian banks and a handful of oligarchs, led to a correction in the S&P 500. The index closed in down just over 10% from its all-time high in early January.

On Wednesday, there was a new round of concern: Ukraine made clear it was on a war footing and President Joe Biden imposed sanctions on the company behind the Nord Stream 2 gas pipeline, which allegedly transported natural gas to Germany from Russia.

Consequently, the

Dow Jones Industrial Average
fell 464 points, or 1.4%, after starting strongly in the green. the

S&P500
fell 1.8% after the index fell 1% in the last session. the

Nasdaq Compound
fell 2.6%.

The Dow, at 33,131.76, is just above a correction – 33,119.68, which would represent a 10% decline from its all-time high close of 36,799.65 reached on January 4. The last time the index closed in correction territory was in February 2020, at the earliest. days of Covid-19.

The late sell-off, for the second day in a row, signals that markets are noticing heightened risk to economic growth; investors take profits while they can, just before the markets close.

On Tuesday, all three indexes fell more than 1% after the Kremlin ordered Russian troops into eastern Ukraine, raising fears the United States could impose heavy sanctions on Russian oil, which would restrict global supply and drive up the price of the raw material. This would lead to more inflation, which is already hurting consumers. Instead, Biden announced sanctions against Russian banks and oligarchs.

Wednesday’s fear trade didn’t have quite the same panicky feel as Tuesday’s. Stocks were falling, but money was not flowing into safe assets. The price of the 10-year Treasury note was down, pushing its yield up to 1.99% from a Tuesday close of 1.94%. And the price of WTI crude oil fell 0.5% to just under $92 a barrel and is still below its multi-year high of just over $95, which it touched early on Tuesday.

Regarding the situation in Russia, “many have been assessed [in]wrote Mike Wilson, chief US equity strategist at Morgan Stanley.

Maybe the stock market just hasn’t finished “pricing in” Russian risk.

This is partly because any further Russian aggression would result in tougher sanctions from the United States. Biden said so in his Tuesday briefing, leaving the oil sanctions on the table. The stock market could therefore still be vulnerable to downturns.

Lauren Goodwin, economist and portfolio strategist at New York Life Investments, noted Russia-related risks, which persist. “If Russia penetrates deeper into Ukraine, the conflict could be longer and the reaction from the West could be more severe,” Goodwin said. “Sanctions could be tougher…Rising commodity prices and slowing growth could have a significant impact on the global economy.”

Here’s the key for now: the S&P 500, at 4,226, is still trading a hair above its low for the year. At the low of 4,222 hit in late January, investors rushed to buy battered stocks, sending the index rapidly higher. If the index falls below this level, it could indicate weakening confidence in the economic outlook, but if it remains above, it is a positive sign.

“For many traders (and machines), it [4,222] represents a clear dividing line,” wrote Frank Cappelleri, Chief Market Technician at Instinet. “Above: hold on. Below: Unload all remaining assets.

We’ll see if the buyers step in on Thursday.

And at least until the Federal Reserve makes its monetary policy decision in mid-March, “equities will struggle to find direction until financial markets have a clear answer on whether the Russian-Ukrainian crisis will have a diplomatic solution or a regional war”. writes Edward Moya, senior market analyst at Oanda.

Overseas, London

FTSE100
increased by 0.1%, and Hong Kong

Hang Seng Index
closed the day with gains of 0.6%.

Here are five stocks in motion on Wednesday:

Palo Alto Networks

(Ticker: PANW) The stock rose 0.4% after the security software company reported strong demand for its products and fourth-quarter financial data that beat expectations.

Twitter

(TWTR) fell 0.5% after the company announced it would sell $1 billion worth of high-yield debt.

Capri Holdings

(CPRI) fell 1% after the company reported earnings of $2.22 per share, beating estimates of $1.69 per share, on sales of $1.6 billion, above expectations of $1.47 billion.

TJX Cos.

(TJX) fell 4.1% after the company reported earnings of 78 cents per share, missing estimates of 91 cents per share, on sales of $13.8 billion, below expectations of 14 .2 billion.

Marathon oil

(MRO) gained 0.7% after being upgraded from neutral to overweight at Piper Sandler.

Write to Jacob Sonenshine at [email protected] and Jack Denton at [email protected]