February Market Wrap: Ukraine Worries, Inflation Slam Stocks, Boost Commodities

 | Mar 01, 2022 12:01

It seems like much more than just 11 days ago that St. Louis Fed President James Bullard said the US central bank needed to bump up its short-term interest rate to 1% by July 1. Bullard was responding to rapidly rising inflation which was running hot at over 7% YoY, the highest in decades.

After his remarks, stocks swooned. The S&P 500 Index slumped 4% over the next three days.

Nearly three weeks later, though one still hears inflation warnings what with US CPI at 0.6% on a monthly basis, the bigger question now is how much havoc will Russia's invasion of Ukraine wreak on markets and the global economy?

Short answer: Plenty. With more than abundant volatility ahead.

The two stressors—each a major concern in its own right—resulted in serious declines during the month of February for many global markets. For US indices, the S&P 500 finished the month down 3.1%. The Dow Jones Industrial Average dropped 3.5%, and the NASDAQ Composite Index slid 3.4%. The three indexes also suffered their second monthly losses in a row.

Stocks were lower for the month in Japan, Germany, France, the United Kingdom, India and Hong Kong as well.

Indeed, stocks have been struggling for the past few months, since at least the start of 2022 if not longer. The NASDAQ 100 hasn't hit a 52-week high since Nov. 22, 2021, but the index's declines have been modest, despite everything.

Still, as March begins, it's the Russian war in Ukraine that's front and center. While officials from both countries met Monday near the Belarusian border, and have agreed to meet again though no accord was reached. As of the time of writing, the fighting has only grown fiercer.

The Russian invasion has been heavily criticized around the world and an array of sanctions has been imposed on Moscow and its enablers. Markets were punishing Russian aggression as well.