Wall Street’s main indexes slipped on Tuesday with financial stocks bearing the brunt for a second straight day as the Russia-Ukraine crisis deepened, while a surge in oil prices boosted shares of energy companies.
Eight of the 11 major S&P sectors declined in early trading, with financials dropping 2.7% as U.S. 10-year Treasury yields slumped to five-week lows amid a flight to safe-haven debt.
Wells Fargo lost 4.5%, while the broader banks index was down 3.8%. However, the energy sector outperformed with a 1.1% gain as oil jumped back above $100 a barrel.
Chevron Corp climbed 3.2% to hit a record high after the oil major raised its share buyback program and forecast for operating cash-flow through 2026.
A Russian armoured column bore down on Ukraine’s capital Kyiv on the sixth day of assault on its western neighbour. The conflict has drawn sharp reprisals from the West, with equity markets plunging on Monday after several countries announced bold sanctions against Moscow over its invasion of Ukraine.
“Investors don’t like uncertainty and this is a huge level of uncertainty for financial markets. Markets are pricing in a higher risk premium on equities,” said Jeff Schulze, investment strategist at ClearBridge Investments.
“Given the fact that the U.S. economy is accelerating, the uncertainty will be relatively short lived and it wouldn’t be a surprise if the market found its footing, sometime over the next couple of weeks when clarity is restored.”
Data showed U.S. manufacturing activity picked up more than expected in February as COVID-19 infections subsided, though hiring at factories slowed, contributing to keeping supply chains snarled and prices for inputs high.
At 10:19 a.m. ET, the Dow Jones Industrial Average was down 303.82 points, or 0.90%, at 33,588.78, the S&P 500 was down 19.78 points, or 0.45%, at 4,354.16, and the Nasdaq Composite was down 10.39 points, or 0.08%, at 13,741.01.
Target Corp was a bright spot, with its shares jumping 11.1% after the big-box retailer forecast 2022 sales and profit above analysts’ expectations.
Defense stocks, including Lockheed Martin Corp, rose, building up on a sharp rally in the previous session. Shares of mega-cap growth names including Apple Inc were mixed.
The CBOE volatility index, also known as Wall Street’s fear gauge, was last trading at 31.41 after hitting its highest level since Feb. 24 in the previous session.
Zoom Video Communications Inc slipped 2.6% after it forecast downbeat full-year revenue and profit, signaling a hit from tough competition and lower sign-ups for its core Meetings platform.
Lucid Group Inc tumbled 12.4% after the luxury electric car maker revised down its production forecast for 2022 due to “extraordinary supply chain and logistics challenges”.
Declining issues outnumbered advancers for a 1.02-to-1 ratio on the NYSE and for a 1.10-to-1 ratio on the Nasdaq.
The S&P index recorded 26 new 52-week highs and 8 new lows, while the Nasdaq recorded 29 new highs and 54 new lows.