Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, US, February 15, 2022.
Brendan McDermid | Reuters
Stock futures fell sharply Monday night, as traders continue to monitor tensions between Russia and Ukraine.
Futures related to the Dow Jones Industrial Average were down 543 points, or 1.6%. S&P 500 futures are down about 2%, and Nasdaq 100 futures are down 2.7%. The US stock market was closed on Monday for the President’s Day holiday.
Oil prices rose, with West Texas Intermediate crude futures jumping 3.6% to $94.30 a barrel.
Russian President Vladimir Putin said Monday that he will recognize the independence of two separatist regions of Ukraine. Possibly undermining peace talks with President Joe Biden. This announcement was followed by news that Biden was to order sanctions against separatist regions of UkraineThe European Union has pledged to take additional measures.
Putin later ordered troops into the two breakaway regions.
This news came after the White House said on Sunday that Biden accepted “in principle” To meet with Putin in another attempt to calm the Russian-Ukrainian position through diplomacy. White House Press Secretary Jen Psaki said the summit between the two leaders will take place after a meeting between Secretary of State Anthony Blinken and his Russian counterpart, Sergei Lavrov.
The Russian-Ukrainian conflict has put pressure on market sentiment recently, with the major averages posting consecutive weekly losses. The Dow fell 1.9% last week, and the S&P 500 and Nasdaq Composite were down 1.6% and 1.8%, respectively.
Traders are also watching the Federal Reserve, where the US central bank is expected to raise interest rates several times starting next month. According to CME Group FedWatchTraders are betting that there is a 100% chance of a Fed rate hike after the March 15-16 meeting.
A tighter monetary policy outlook has put pressure on stocks, particularly those in interest rate-sensitive sectors like technology, and sent Treasury yields sharply higher to start 2022. The benchmark 10-year Treasury yield ended last week at 1.93% after a breakout period Brief above 2%. The 10 years started trading in 2022 at around 1.51%.
“All eyes are on the Federal Reserve,” Ryan Grabinsky, an investment strategist at Stratigas, wrote in a note released Friday night. “As of today, the market expects the Fed to raise rates at nearly every meeting this year. Despite that, we’ve left monetary policy as favorable for now because the Fed continues to buy Treasuries (accommodative policy action).”
Meanwhile, Wall Street is preparing for the end of corporate earnings season, with Home Depot and eBay due to report this week. It’s been a solid earnings season so far: Of the more than 400 companies on the S&P 500 that posted fourth-quarter earnings, 77.7% beat analysts’ expectations, according to FactSet.
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