NEW YORK, RAW – Wall Street indexes ended sharply lower on Wednesday as Ukraine declared a state of emergency and the US State Department said a Russian invasion of Ukraine remains potentially imminent.
The State Department added that Washington has not seen any indication of Russians backing away, while the White House said President Joe Biden has no intention of sending US troops to fight in Ukraine.
Earlier, the West unveiled more sanctions against Russia over its move into eastern Ukraine, and in what some market- watchers saw as another sign of a possible Russian military onslaught, Moscow began evacuating its Kyiv embassy.
Nasdaq led the day’s decline, while the information technology sector was the biggest drag on the S&P 500.
“There’s been geopolitical risks and rhetoric that have given investors that much more to be worried about,” said Liz Young, head of investment strategy at SoFi.
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“What it’s done is exacerbate the momentum that was already in place to the downside,” she said. “What we were seeing already coming into this was clearly a compression in multiples across a number of different highly valued areas of the market.”
Investors especially have been on edge about possible aggressive tightening by the Federal Reserve to combat inflation.
The Nasdaq has tumbled more than 15 per cent so far this year, while the S&P 500 confirmed a correction in the previous session when the index ended down more than 10 per cent from its Jan. 3 closing record high.
According to preliminary data, the S&P 500 lost 78.45 points, or 1.82 per cent, to end at 4,226.31 points, while the Nasdaq Composite lost 340.66 points, or 2.55 per cent, to 13,040.85. The Dow Jones Industrial Average fell 459.12 points, or 1.37 per cent, to 33,137.49.
A Reuters poll shows the S&P 500 index still rising by end-2022.
“We’ve seen a really strong outperformance by value to the start of the year. But with all of these risks to the overall backdrop and the fact that economic growth is going to be slowing this year, we like to stick with a little bit more defensive, value-type areas, the higher dividend payers, that type of thing,” said Zachary Hill, head of portfolio management at Horizon Investments in Charlotte, North Carolina.
In company news, Lowe’s Cos Inc raised its full-year sales and profit forecasts.