US stocks tank after Russia invades Ukraine: Bear market in sight for Nasdaq 100 while Dow plummets 745 points and oil hits $99 per barrel
- US stocks plunged following Russia’s invasion of the Ukraine on Thursday
- The Nasdaq 100 fell by 200 points and the Dow futures sank by 745 points when markets opened on Thursday before leveling off at a 651 point loss
- The Nasdaq Composite and S&P 500 also took a tumble but are recovering
- Stocks are fluctuating wildly as the indexes see their worst day this week
- Crude oil prices also soared to the highest in eight years as it reached $99.61 per barrel after peaking at more than $100 on early Thursday
US stocks plunged and crude oil prices soared on Thursday amid chaos in the markets as investors dumped riskier assets after Russia launched an all-out invasion of Ukraine.
The Nasdaq 100 fell by 200 points in early New York trading, and although it recovered by the afternoon, it’s still on course to shed 20 per cent from its November record closing high, or bear market territory, the first such instance since the selling in March 2020 at the peak of the pandemic.
The Nasdaq Composite also saw a fall this morning of about 286 points, a 2.2 per cent drop. The stock was able to rebound by the afternoon and was up about 5 points.
The Dow Jones Industrial Average, however, fell by 745 points, about 2 per cent, at the start of Thursday’s trading. The index saw a bit of a rebound but is still currently at a 651 point loss.
It indicates that the blue-chip index was set to confirm a correction from its all-time closing high on January 4, after market opens. A correction is confirmed when an index closes 10 per cent or more below its record closing level.
The S&P 500 also took a tumble, falling by as high as 92 points on Thursday morning, before settling at a 38 point loss by the afternoon, less than a 1 per cent drop.
The markets are fluctuating wildly today, and all three indexes are seeing their worst performance of the week as the Nasdaq fell by 6.46 per cent, the Dow by 5.87 per cent and the S&P 500 by 5.19 per cent.
Oil prices jumped as high as 8 per cent on Thursday to reach $99.61 per barrel, the highest in eight years.
The U.S. West Texas Intermediate crude futures, the national oil benchmark appeared to peak early Thursday morning with prices reaching over $100 before scaling back to $95.61 by the afternoon.
Brent crude, the world benchmark, topped $100 a barrel for the first time since 2014 on its way to $103 per barrel.
The high oil prices mean that gas prices will likely surge as the national average price of regular gasoline hit $3.54 today, up 22 cents from a month ago and 91 cents more than a year ago, according to the AAA Gas Price Index.
The Dow Jones, Nasdaq Composite and S&P 500 all took a large fall in early morning trading on Thursday. The Dow remains at a 600 point loss while the Nasdaq and S&P are recovering
The US crude oil benchmark hit $99.61 per barrel on Thursday, the highest in eight years
The high cost of oil is expected to further increase gas prices, which is expected to reach a national average of $4 per gallon. Some gas stations in California, are already charging as high as much as $5.80 per gallon
As the US economy takes a hit, some investors are betting that things will only get worse as short sellers have been adding to their positions against the SPDR S&P 500 Exchange-Traded Fund Trust, which tracks the broad US stock index, the Wall Street Journal reported.
Shorting refers to investors borrowing shares of a stock and selling them, with a plan to repurchase them at a lower price and pocketing the difference.
The short sellers added $8.6 billion to their positions against the SPDR fund, while other investors are also buying up options contracts that would pay out if the stock and bond markets continue to see loses due to the conflict in the Ukraine.
Investors have added $1.3 billion to their short positions against Telsa in the last month, and almost $844 million against Nvidia Corp, WSJ reported.
They’ve also been trimming their best against Bank of America, Apple and Texas Instruments.
Jordan Kahn, chief investment officer at ACM Funds, told WSJ that investing firms have been trimming their positions and adding short positions near the end of 2021 when they saw individual stocks selling off and major indexes only being kept afloat by major indexes.
‘That’s kind of a red flag for us,’ he said. ‘We think that the most likely scenario is that those big stocks that haven’t had as big a correction yet will probably at some point play catch-up to the downside.’
The Nasdaq composite fell by 900 points this week. In the past 6 months, the Nasdaq dropped by about 13.16 per cent
The Dow Jones also dropped by more than 2,027 points this week. In the past 6 months, the index has dropped by 8.16 per cent
This week, the S7P 500 saw a drop of 5.13 per cent, a decrease of 229 points. In the past 6 months, the index has dropped by 6.65 per cent
Patrick DeHaan, head of petroleum analysis at GasBuddy, told CBS that gas prices are expected to hit $4 a gallon in the weeks to come.
‘That $4 is something we haven’t seen in so long — it would cause shock waves across America,’ he said.
The prices rose amid the conflict in Ukraine as Russia exports about 12 per cent of the world’s crude oil supply, with disruptions to those exports causing oil prices to go up.
Facing backlash over rising inflation, which hit 7.5 per cent last month, and gas prices, the Biden administration is considering proposals to suspend the federal gasoline tax, which would spare drivers 18.4 cents per gallon for standard gas.
The White House is considering another release from the Strategic Petroleum Reserve to ease the rising oil prices, the Washington Post reported.
Fears of war in eastern Europe have hammered stocks in recent days putting the main indexes on track for their worst week in a month, down between 2.8 per cent and 3.8 per cent as of Wednesday’s close.
Russian missiles rained down on Ukrainian cities. Ukraine reported columns of troops pouring across its borders into the eastern Chernihiv, Kharkiv and Luhansk regions, and landing by sea at the cities of Odessa and Mariupol in the south.
‘At this point, it’s impossible to bet on any scenario. We can only monitor closely the latest developments and stand ready for more volatility,’ Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said.
The CBOE Volatility index, also known as Wall Street’s fear gauge, was last trading at 36.41, its highest since January 24.
Stock markets in Britain and around the world plunged today amid fears that a war in Europe will fuel higher inflation and derail the economic recovery following the pandemic.
The FTSE 100 in London saw its biggest one-day fall since June 2020, dropping by 3.9 per cent to 7,207.01, wiping £77 billion off the value of the UK’s 100 biggest listed companies.
The Dax in Germany fell by 3.8 per cent or 555 points to 14,076 this morning, while the CAC 40 in France was down 3.4 per cent or 230 points to 6,550 as analysts declared that stock markets were ‘getting hit very hard’.
The Moscow Stock Exchange – where trading was temporarily suspended today – fell by an astonishing 45.2 per cent or 1,395 points to 1,690 on the day at one point, while the rouble dived to a record low against the US dollar.
A currency trader talks on the phone at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul today
FTSE 100 – PAST WEEK: The FTSE index in London has plunged this morning on the news that Russia has attacked Ukraine
FTSE 100 – PAST TWO YEARS: The FTSE 100 plunged at the start of the pandemic but had recovered most of its losses since
RUSSIAN MOEX INDEX — The Moscow Stock Exchange fell an astonishing 45.2 per cent or 1,395 points to 1,690 today
Overnight, stocks in Asia fell with the Hang Seng in Hong Kong losing 3.1 per cent; the Kospi in Seoul falling 2.6 per cent; the Shanghai Composite Index down 0.9 per cent; and the Nikkei 225 in Tokyo dropping 2.2 per cent.
On Wall Street yesterday, the S&P 500 fell 1.8 per cent to 4,226, which put it 11.9 per cent below its record last month on January 3, while the Nasdaq lost 2.6 per cent to 13,038 and the Dow Jones fell 1.4 per cent to 33,132.
Already this week, fuel prices have reached new record levels as the Ukraine crisis affects the price of oil. The RAC said the average cost of a litre of petrol or diesel at UK forecourts on Tuesday was 149.30p or 152.68p respectively.
It warned drivers to expect petrol prices to hit the ‘grim milestone’ of 150p per litre in the coming days as retailers pass on rising wholesale costs amid concerns over the reliability of supplies after Russian troops entered Ukraine.
And gas and food prices are now in danger of rising much higher than expected, with chair of the Foreign Affairs Committee Tom Tugendhat saying that the cost-of-living crisis will become ‘driven by war’.
The attack has come to Ukraine on all fronts, with bombs and missiles striking targets across the country, ground forces rolling in from Belarus, Crimea, Donetsk and Luhansk, and paratroopers dropping on Kharkiv
An explosion lights up the night sky over Kiev in the early hours of today, as Russia launched an all-out attack on Ukraine
A huge explosion is seen at Vinnytsia military base in Ukraine today as the country comes under all-out attack by Russia
Vladimir Putin is pictured this morning declaring war on Ukraine, in what he termed a ‘special military operation’
Putin announced the action during a televised address early this morning, saying the move was a response to threats from Ukraine.
He said Russia does not have a goal to occupy Ukraine, but the responsibility for bloodshed lies with the Ukrainian ‘regime’.
He also warned other countries that any attempt to interfere with the Russian action would lead to ‘consequences they have never seen’.
Putin accused the US and its allies of ignoring Russia’s demand to prevent Ukraine from joining Nato and offer Moscow security guarantees.
He said the Russian military operation aims to ensure a ‘demilitarization’ of Ukraine, adding that all Ukrainian servicemen who lay down arms will be able to safely leave the zone of combat.
Explosions could be heard in the Ukrainian capital of Kyiv shortly after Putin’s address, while explosions were also reported in the cities of Odesa and Kharkiv.
Ukraine’s border guard agency said the Russian military attacked the country from neighboring Belarus.
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