The stock market moved sharply lower on Monday after oil prices briefly hit more than $130 per barrel overnight—the highest level since July 2008—as the escalating conflict between Russia and Ukraine continued to weigh on investors, who turned to safe-haven assets like gold.
Stocks fell on Monday after ending last week on a down note: The Dow Jones Industrial Average fell 2.4%, around 800 points, while the S&P 500 lost 3% and the tech-heavy Nasdaq Composite 3.6%.
Markets were under pressure yet again as heavy fighting continued in Ukraine, with planned civilian evacuations from several cities over the weekend canceled after Russia reportedly violated a cease-fire agreement.
Oil prices, which have skyrocketed in recent weeks, jumped overnight after U.S. Secretary of State Antony Blinken said on Sunday that the U.S. and its allies are considering a ban on Russian oil and natural gas imports in response to the country’s actions in Ukraine.
U.S. benchmark West Texas Intermediate now sits at $120 per barrel (after hitting $130 overnight), while global benchmark Brent crude is trading at around $124 per barrel (after briefly rising to $139 per barrel).
Investors are now growing increasingly concerned by surging energy prices, with experts warning that could result in higher inflation and potentially slower economic growth.
Gold prices crossed $2,000 per ounce for the first time in over a year, meanwhile, as investors looked for safe-haven assets after Russian President Vladimir Putin pledged to continue his invasion unless Ukraine fully surrendered and met Russia’s original demands.
“During periods of tremendous stress, the market tends to overweight large negative outcomes, even if those outcomes are unlikely,” says Nationwide’s chief of investment research, Mark Hackett. “We likely won’t see a stabilization in the market until there are positive developments in Ukraine, but when that happens, the market should snap back quickly and intensely.”
Stocks fell last week, with the Dow and S&P 500 each sliding around 1.3%. The Dow declined for a fourth consecutive week, while the S&P 500 closed in on correction territory—meaning that the index is more than 10% below its record highs at the start of 2022. The Nasdaq, which lost nearly 3% last week, has been in a correction since earlier this year.
With commodity prices—including everything from wheat to oil—surging in recent weeks amid Russia’s invasion of Ukraine, that is likely to result in a “shock” for markets, which will “undoubtedly” lead to more inflation, says Kristof Gleich, president and chief investment officer at Harbor Capital. Rising oil prices in particular will “cause an impact” at the gas pump, with the average U.S. price for gas rising to more than $4 per gallon over the weekend, according to AAA.
Shares of retailer Bed Bath & Beyond jumped up to 110% in early trading on Monday after investor Ryan Cohen disclosed a 9.8% stake in the company and sent a letter to management criticizing the company’s “disappointing shareholder returns and perpetual underperformance.” He suggested several changes to help boost the stock—including brand spinoffs, a management reshuffle and potentially even a full sale of the company.
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