Finance

Wall St drops as Ukraine tensions sap risk appetite

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., January 26, 2022. REUTERS/Brendan McDermid/File Photo

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  • Roku slides as supply chain issues hit sales
  • Monthly options expire seen adding volatility
  • Indexes down: Dow 0.89%, S&P 1.16%, Nasdaq 1.77%

Feb 18 (Reuters) – US stock indexes slumped on Friday as escalating tensions in Ukraine amid fears of an imminent Russian invasion prompted investors to dump risky assets in the run-up to a long weekend.

All the major S&P 500 sectors were in the red, with energy shares (.SPNY) leading losses due to weaker oil prices.

Russian news agencies reported about a blast in the eastern Ukraine city of Donetsk and separatists planned to evacuate residents from the region to Russia due to heavy shelling. read more

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Western powers warned that Russia’s military build-up around Ukraine was continuing and it may use the current developments as a justification to invade the country, which they say could happen anytime.

Speculations about the Federal Reserve’s next move have also weighed on equities. New York Fed Bank President John Williams said earlier in the day it would be appropriate to hike interest rates in March without mentioning the magnitude.

“We don’t know how many rate hikes we’re going to see this year,” said Dennis Dick, a proprietary trader at Bright Trading LLC.

“We just know, we’re getting into a tightening environment and the unknown is scaring traders. And then you go into the geopolitical risk with the Ukraine situation, and it adds up to trader saying I’m a little bit nervous on stocks right now, especially into a long weekend.”

Expiration of monthly options contracts was also seen adding to the volatility ahead of the US market holiday on Monday for Presidents’ Day.

At 1:16 pm ET, the Dow Jones Industrial Average (.DJI) was down 305.90 points, or 0.89%, at 34,006.13, the S&P 500 (.SPX) was down 50.76 points, or 1.16%, at 4,329.50, and the Nasdaq Composite (.IXIC) was down 243.13 points, or 1.77%, at 13,473.59.

The indexes were on course for their second straight weekly losses, buffeted by rising tensions between Moscow and the West over Ukraine.

The CBOE volatility index (.VIX), also known as Wall Street’s fear gauge, was last up 28.46 points, well above its long-term average of 20.

Big banks declined and as did mega-cap growth stocks including Amazon.com , Google parent Alphabet (GOOGL.O) and Tesla Inc (TSLA.O).

Intel Corp slipped 5.9% after the chipmaker forecast its profit margin to drop this year and then be steady for several years as it invests in new technologies and factories to meet rising chip demand.

About 78% of the 417 S&P 500 companies have posted quarterly earnings in this reporting season above analyst estimates as per Refinitiv data.

Roku Inc (ROKU.O) tumbled 24.2% after the streaming platform’s disappointing quarterly revenue and first-quarter outlook. read more

DraftKings Inc (DKNG.O) shed 17.5% after the sports-betting company forecast a bigger-than anticipated 2022 loss.

Declining issues outnumbered advancers for a 1.98-to-1 ratio on the NYSE and a 2.38-to-1 ratio on the Nasdaq.

The S&P index recorded eight new 52-week highs and 27 new lows, while the Nasdaq recorded 14 new highs and 347 new lows.

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Reporting by Susan Mathew and Devik Jain in Bengaluru; Editing by Anil D’Silva, Maju Samuel and Aditya Soni

Our Standards: The Thomson Reuters Trust Principles.

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