Wednesday, February 23, 2022

DJIA: 33,131.76, down 464.85
S&P 500: 4,225.51, down 79.25
Nasdaq: 13,037.49, down 344.03

Stocks drop on geopolitical uncertainty

U.S. stocks finished firmly lower on Wednesday amid escalating geopolitical uncertainty. The S&P 500 fell 1.8%, down for a fourth consecutive session, after yesterday closing in correction territory (defined as a 10% drawdown from a recent peak) for the first time since the start of the pandemic. The Nasdaq Composite retreated 2.6%, now 18.8% below its November 19 record high. The Dow lost 464 points. Treasuries weakened, with the 10-year note yield climbing five basis points (0.05%) to 1.98%.

President Biden imposed another round of sanctions on Russia that impacted the builder of the Nord Stream 2 gas pipeline and its corporate officers. These penalties followed initial sanctions on some Russian banks and individuals announced on Tuesday, and were in response to Russian President Putin recognizing two breakaway regions in eastern Ukraine as independent states, with “peacekeeping forces” being ordered into the separatist areas. Investors are closely monitoring the developments, assessing the possible economic implications of a potential all-out Russian invasion of Ukraine.

Ten of 11 S&P 500 sectors closed in negative territory, with Consumer Discretionary shares faring the worst amid weakness in retailers. Technology was also among the hardest hit groups following a cyberattack on a number of Ukraine government and bank websites. The FAAMG complex of mega-cap stocks shed more than 2.4%. In earnings, shares of Lowe’s Cos Inc. ended little changed despite the home improvement retailer topping profit and sales estimates and providing a positive full-year outlook. Discount department store TJX Cos Inc. slid 4.2% on disappointing earnings and revenue. Elsewhere, Caesars Entertainment Inc. gained 3.7% following a smaller-than-anticipated quarterly loss.

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