Wall Street Shakes Fed, Ukraine Anxiety As Oil Plunges

All three major U.S. stock indices closed in positive territory on Monday, Jan. 24, after the Dow Jones Industrial Average posted a decline of more than 1,000 points earlier in the day.

WASHINGTON, USA – A tumultuous day on Wall Street saw stocks end higher after posting heavy losses earlier in the day, as uncertainty surrounding rising geopolitical tensions and Fed policy weighed on oil and boosted safe havens.

All three major U.S. stock indexes ended the day in positive territory, after the Dow Jones Industrial Average posted a decline of more than 1,000 points earlier in the day.

The Dow Jones ended up 0.29%, while the S&P 500 gained 0.28% and the Nasdaq Composite added 0.63%.

The MSCI World Equity Index, which tracks stocks from 45 countries, fell 0.78%.

The late gains marked a surprising turnaround for U.S. stocks, which were battered last week posting their heaviest losses since 2020. The drop potentially prompted bargain hunters to help drive them higher on Monday, January 24. .

“The recent decline in stocks is overblown and inconsistent with the momentum of activity, the easing of bottlenecks and what we expect to be a strong earnings season,” JPMorgan analysts wrote in a midday note.

The market uproar came as NATO said on Monday it was putting its forces on hold and bolstering Eastern Europe with more ships and fighter jets in response to Russia’s military buildup to borders of Ukraine.

The US State Department on Sunday (January 23rd) ordered family members of diplomats to leave Ukraine, while President Joe Biden weighed options for bolstering US military assets in the region.

Attention also turns to the US Federal Reserve, which begins a two-day policy meeting on Tuesday, January 25. rate hikes.

“Investors accept the stark reality that the end of ultra-loose monetary policy is upon us. This week the Federal Reserve is meeting and while we don’t expect any change at this meeting, the market is pricing in a full quarter-point increase in March,” said Megan Horneman, director of portfolio strategy at Verdence Capital Advisors.

The risk attitude was evident in oil markets, with prices falling 3% after the close on Friday, January 21, with a fifth straight week of gains.

Brent crude fell $1.62, or 1.8%, to $86.27 a barrel, while U.S. West Texas Intermediate crude stabilized at $1.83, or 2.2%, at $83.31.

Other riskier assets also came under pressure. Bitcoin hit a six-month low on Wednesday, January 19, but edged higher on Monday evening to $36,921, still well below November’s all-time high of $69,000.

Clamping looms fed

Worries that the Fed could tighten too quickly at its meeting this week added to investor nerves.

The US central bank is expected to confirm that it will soon start draining the huge reservoir of liquidity that has supercharged growth stocks in recent years.

Treasury yields were down on most maturities on Monday. The benchmark US 10-year yield was flat on the day at 1.7511%, having earlier hit an 11-day low at 1.7070%.

Fears over the Fed and Ukraine boosted safe-haven investing. The dollar hit a two-week high against a basket of currencies, last up 0.26%. Spot gold prices also jumped 0.55% to $1,843.26 an ounce. – Rappler.com

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