Stock futures open lower as investors monitor Russia’s invasion

Stock futures opened lower Thursday evening after a dramatic swing into positive territory during the regular trading day.

Contracts on the S&P 500 declined. The index rose by 1.5% during Thursday’s session, shaking off losses of as much as 2.6% at session lows. The Dow eked out gains after shedding more than 800 points at its worst levels of the day. And the Nasdaq Composite rose 3.3% in its best session since Jan. 31.

Stocks clawed back losses to rise for the first time in five sessions even against the backdrop of Russia’s invasion of Ukraine. Though equities have been sliding and energy commodity prices soaring in recent sessions as investors considered the financial market impacts of the conflict, markets at least temporarily stabilized on Thursday ahead of further evidence of any fallout.

“The market is going to overreact to good news and bad. The news this morning was sell, sell, sell,” Allan Boomer, Momentum Advisors chief investment officer, told Yahoo Finance Live on Thursday. “And now we analyzed the news … I think what the market has decided is that this Ukraine-Russia [situation] is a tragedy, [but] it’s not necessarily a global event that’s going to cause us to fall into a deep recession.”

“I think the biggest factor right now is the Fed,” he added. “And if anything, this Russian event may make the Fed a bit less hawkish.”

And indeed, market participants have now priced in a much lower probability that Federal Reserve officials will front-load their interest rate hiking cycle and raise rates by 50 basis points at the end of their March meeting. The last time the Fed raised rates by more than 25 basis points in one meeting was in 2000. While such a move would serve as an aggressive shift by the Fed to begin actively reining in inflation, it could also further roil financial markets that have already endured increased volatility this year and have now also been spooked by the specter of further international conflict.

Story continues

“This has been the second worst start to the year for U.S. equities since 2000. Yet, these moves are not solely (or even mostly) driven by the Russia/Ukraine tensions,” Seema Shah, Sharing Principal Global Investors chief strategist, wrote in an email. “Equity declines began in January and were, at least initially, driven by inflation concerns and expectations for significantly sharper central bank tightening.”

“Energy prices had been rising steadily throughout the pandemic recovery and in response to lower-than-expected OPEC+ production. Concerns around Federal Reserve balance sheet reduction caused credit spreads to start to gap out in early January,” she added. “The Russia/Ukraine situation is certainly significant—but it has simply compounded these already challenging market conditions.”

Other strategists also suggested that U.S. stocks would trade primarily based on the monetary policy and earnings implications of any impacts of the latest geopolitical tensions.

“The U.S. economy has pretty low exposure directly to Ukraine and the situation with Russia. However, the important thing here is, how does it impact inflation expectations? And that’s really what we’re keeping an eye on,” Anna S. Han, Wells Fargo Securities equity strategist, told Yahoo Finance Live on Thursday. “As inflation becomes a variable for corporates, the potential for it to eat away at earnings, or a potential for it to really steer the Fed to accelerate or decelerate that rate hike cycle — that’s what we’re looking at.”

—

6:01 p.m. ET Thursday: Stock futures open lower after rally

Here were the main moves in markets Tuesday evening:

• S&P 500 futures (ES=F): -21.5 points (-0.5%), to 4,262.50

• Dow futures (YM=F): -145 points (-0.44%), to 33,011.00

• Nasdaq futures (NQ=F): -13,879.75 points (-0.62%) to 13,879.75

—

Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter

Read the latest financial and business news from Yahoo Finance

Follow Yahoo Finance on Twitter, Instagram, YouTube, Facebook, Flipboard, and LinkedIn