Early Monday morning, stock futures were lower. Investors kept an eye on the growing tensions between Ukraine and Russia, as well as the possibility of a Fed rate hike.
Dow Jones Industrial Average futures were down 215 points, or 0.62 percent. Futures on the S&P 500 and the Nasdaq 100 both fell 0.68 percent and 0.81 percent, respectively.
Stocks had a rough week, with hot inflation data and worries of a Russian strike on Ukraine weighing on them. The Dow and S&P 500 lost 1% and 1.8 percent for the week, respectively. The Nasdaq Composite Index, heavily weighted in technology, fell by over 2%. On Friday, the Dow Jones Industrial Average fell 503.53 points or 1.43 percent. The S&P 500 was 1.9 percent, while the Nasdaq Composite was 2.8 percent. The drops occurred as the White House warned that a conflict in Ukraine might break out any day now. This urged Americans to flee “quickly.”
Oil prices, as well as traditional safe havens like Treasurys, rose on Friday.
Impact of Rising Inflation
The underlying concern is that China would support Russia, and the US-China relationship will continue to deteriorate. What’s dangerous is how it affects the U.S.’s relationships with other economic superpowers, impacting economic outcomes.
A weekend phone chat between Joe Biden and Russian President Vladimir Putin, in which Biden attempted to persuade Putin not to invade Ukraine, failed. Traders are also considering the impact of rising inflation on the U.S. economy, as well as the Federal Reserve’s likely response to the price increase.
Last Monday, the Labor Department reported that inflation in January increased by 7.5 percent, the highest level since 1982. The revelation took a toll on rate-sensitive tech firms, sending the 10-year Treasury yield momentarily above 2% for the first time since 2019.
Following the report’s release, St. Louis Fed President James Bullard stated that he was open to a 50-basis-point rate hike next month. He hopes to see a full percentage point raise by July.
