U.S. stock indexes tumbled Monday, with the Dow industrials entering correction and the Nasdaq Composite Index finishing in bear-market territory, as investors weighed the further financial isolation of Moscow and implications of a possible U.S. ban on oil imports out of Russia, which could exacerbate inflationary pressures.
The Dow Jones Industrial Average
fell 797.42 points, or 2.4%, to close at 32,817.38, ending in correction territory for the first time since 2020.
The S&P 500
dropped 127.78 points, or 3%, finishing at 4,201.09.
The Nasdaq Composite Index
declined 3.6%, or 482.48 points, ending at 12,830.96, in bear-market territory.
Last week, the Dow industrials and the S&P 500 each fell 1.3%, and the tech-heavy Nasdaq Composite dropped 2.8%. Meanwhile, the S&P GSCI
index, which tracked 24 exchange-traded futures contracts across five physical commodities sectors, saw its biggest weekly surge in more than 50 years.
What drove markets
Markets carved out fresh 2022 lows on Monday, with losses mounting in consumer discretionary,
falling more than 3%.
One of the few bright spots in the market was the energy sector, even as the White House said it hasn’t decided yet on a ban of energy imports out of Russia, as it looks to further punish Moscow for its invasion of Ukraine.
Germany on Monday rejected a plan for a more coordinated embargo with western allies, saying it will continue to buy natural gas, oil and coal from Russia, because it has grown too dependent on energy imports.
“What is taking place right now is unprecedented,” said Kent Engelke, chief economic strategist at Capitol Securities Management, in a phone call. “You have the U.S. administration still mulling an idea to ban oil exports from Russia, even through Germany said it’s not going to do that,” he said, while also pointing to a host of private-sector companies from Netflix Inc.
to Visa Inc.
to American Express
that have vowed to suspend operations in Russia.
Read: What soaring crude prices mean for the U.S. stock market, amid talk of Russian oil sanctions
Russian troops continued hostilities on Monday as cease-fire attempts failed and an estimated 1.7 million refugees poured into neighboring countries. Ukraine on Monday rejected Moscow’s offer to let its civilians cross into Russia and Belarus. Grain prices also were surging, with wheat
futures jumping 7% and continuing a march toward all-time highs as the war shuts down exports from the Black Sea region, a crucial global breadbasket. U.S. oil futures
settled at $119.40 a barrel, the highest in more than 13 years.
“The galloping commodity prices will naturally put downward pressure on the economy and increase operational volatility for many companies already struggling with inflationary pressures,” said Peter Garnry, head of equity strategy at Saxo Bank.
In U.S. economic data, the amount of credit consumers used in January grew by a scant $6.8 billion, the smallest increase in a year, signaling that households sharply reduced borrowing early in 2022.
A key inflation report, the consumer-price index, is due on Thursday, with investors already fretting about the higher costs of goods and services during the COVID-19 pandemic.
Read: The Russia-Ukraine war is fueling the ‘biggest supply shock to global grain markets’ in living memory
Strategists at Citi cut their year-end S&P 500 target to 4,700 from 5,100. The bank’s chief investment office also said it was making changes to its equity allocations, including adding to stocks tied to energy, minerals and agriculture.
See: Wall Street is beginning to cut S&P 500 forecasts as oil prices surge
Which companies were in focus?
Airline companies faced severe selling, with Delta Air Lines Inc.
United Airlines Holdings Inc.
and Southwest Airlines
all ending sharply lower and the exchange-traded fund U.S. Global Jets ETF
a popular way to garner exposure to the airline industry, down 11.1% on Monday.
Shares of Bed Bath & Beyond
surged after GameStop. Corp.
Chairman Ryan Cohen took a big stake in the home-goods retailer and urged it to explore strategic alternatives, including a full sale of the company. Its stock rose 34.2%.
Shares of Apple Inc.
were down 2.4% ahead of an event on Tuesday, where the technology firm was set to roll out new products, including a cheaper iPhone.
How did other assets do?
The yield on the 10-year Treasury note TMUBMUSD10Y rose 2.6 basis points Friday to around 1.748%. Yields move opposite to debt prices.
The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.5% at around 99, a near two-year peak.
Gold futures GC00 rose 1.5% Monday to settle at $1,995.90 an ounce, the highest since August 2020, after briefly surpassing $2,000 over night.
Bitcoin BTCUSD was down 5.6% around $37,360.
In European equities, the Stoxx Europe 600 SXXP closed 0.9% lower Monday. London’s FTSE 100 UKX fell 0.2%.
In Asia, the Shanghai Composite SHCOMP closed down 2.2% overnight Monday. The Hang Seng Index HSI tumbled 3.9% in Hong Kong. Japan’s Nikkei 225 NIK gave up 2.9%.
—Steve Goldstein contributed to this article.