DJIA: 33,596.61, down 482.57
S&P 500: 4,304.76, down 44.11
Nasdaq: 13,381.52, down 166.55

S&P 500 dips into correction territory

U.S. stocks finished lower on Tuesday as investors weighed escalating geopolitical tensions in Eastern Europe. President Biden joined U.S. allies in announcing sanctions on Russia after Russian President Putin yesterday recognized two breakaway regions in eastern Ukraine as independent, ordering “peacekeeping forces” into the separatist areas. The S&P 500 fell 1%, closing in correction territory (defined as a 10% drawdown from a recent peak). The Dow lost 482 points, having pared a more than 700-point decline from early trading. The Nasdaq Composite shed 1.2%. Treasuries weakened despite the perceived risk-off tone, with the yield on the 10-year note up one basis point (0.01%) to 1.93%. In commodities, West Texas Intermediate crude rose 1.4% to $92.35/barrel, while European natural gas futures surged roughly 11% after Germany postponed the approval of the Nord Stream 2 gas pipeline in reaction to Russia’s actions.

All 11 S&P 500 sectors ended in negative territory, with the more traditionally defensive groups outperforming on a relative basis. Consumer Discretionary led the decline, with Home Depot Inc. sliding 9.2% as projections of decelerating profit growth in 2022 overshadowed a top and bottom line beat.

On the data front, preliminary February readings from research firm IHS Markit showed activity in both the U.S. manufacturing and services sectors expanded at a faster than anticipated pace. Separately, the Conference Board’s consumer confidence gauge deteriorated this month to the lowest level since September. Elsewhere, a measure of home prices in 20 U.S. cities jumped a greater-than-expected 18.6% year-over-year in December.

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