[New York Stock Market] Another Sharp Drop Amid Ukraine Fear of "Possible Invasion Within Days"... Dow's Largest Decline This Year

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[Asia Economy New York=Special Correspondent Joesulgina] Major indices on the U.S. New York stock market plunged simultaneously on the 17th (local time) as geopolitical tensions surrounding Russia and Ukraine escalated. The intensified fears of war due to shelling between government forces and rebels within Ukraine caused market sentiment to freeze solid. U.S. President Joe Biden immediately warned that the threat level of Russia's invasion of Ukraine is "very high," adding that "an invasion could happen within days."

On this day, the Dow Jones Industrial Average closed at 34,312.03, down 622.24 points (1.78%) from the previous day. This was the largest single-day drop for the Dow this year. The S&P 500, which focuses on large-cap stocks, fell 94.75 points (2.12%) to 4,380.26, while the tech-heavy Nasdaq dropped 407.38 points (2.88%) to 13,716.72. The small-cap Russell 2000 index also slid 51.22 points (2.46%).

Investors continued to focus on the ongoing geopolitical risks at the Ukrainian border. After exchanging shelling in the Donbas region of eastern Ukraine, government forces and pro-Russian rebels accused each other of initiating preemptive attacks, heightening fears of war.

By sector, widespread selling was seen mainly in technology stocks. Tesla closed down 5.98%, breaking below the 900-dollar mark. Nvidia fell 7.51% despite reporting better-than-expected earnings, weighed down by weak forecasts from chip manufacturers. Leading tech stocks such as Apple (-2.11%), Meta Platforms (-4.07%), Microsoft (-2.93%), Amazon.com (-2.18%), and Netflix (-2.82%) all recorded declines.

Palantir slid more than 15% after releasing earnings below expectations. In contrast, consumer staples showed stability. Walmart, which reported better-than-expected earnings, rose over 4%, leading the consumer goods sector. Cisco also closed up 2% on strong earnings. DoorDash jumped more than 10%.

As geopolitical tensions escalated, investors flocked to safe-haven assets. The price of gold, a representative safe asset, reached its highest level in eight months. On the New York Mercantile Exchange, April gold futures rose 1.6% from the previous trading day to $1,902 per ounce.

U.S. 10-year Treasury yields, which move inversely to bond prices, fell back to the 1.9% range. The Russian ruble weakened against the dollar. Adam Sarhan, CEO of 50 Park Investments, commented, "The market is navigating geopolitical tensions between Russia and Ukraine while seeking sectors that can generate profits." The Chicago Board Options Exchange (CBOE) Volatility Index (VIX) rose more than 15% to the 28 level.

The market remains closely watchful of geopolitical risks surrounding Ukraine. Mark Chandler, Chief Market Strategist at BMO Global Forex, said, "Anything could happen over the weekend," adding, "The market is not in a risk-taking mood."

Earlier, Russia announced a partial withdrawal of some troops from the border area with Ukraine, but NATO allies, including the U.S., dismissed this claim and countered that Russia is actually increasing its forces. The ongoing shelling between government forces and rebels amid the withdrawal dispute suggests that the threat of invasion has intensified.

U.S. President Joe Biden said in response to reporters' questions about the threat level of Russia's invasion of Ukraine, "It is very high because they (Russia) have not moved their troops at all." When asked if he believes an invasion will occur, he replied, "My sense is it will happen within days."

U.S. Secretary of State Antony Blinken, attending the United Nations (UN) Security Council, also criticized Russia for creating a pretext to invade Ukraine. He urged, if Russia truly has no intention of starting a war, to immediately withdraw troops and send diplomats to the negotiating table, proposing a foreign ministers' meeting next week.

Separately, the U.S. State Department stated that Russia's expulsion of a senior official from the U.S. Embassy in Moscow is "unjustified" and that it "considers this an escalation of tensions and is considering responses."

Economic indicators were generally weak. The weekly initial jobless claims in the U.S. increased for the first time in four weeks. Last week (February 6?12), initial jobless claims rose by 23,000 to 248,000, significantly exceeding experts' expectations of 218,000.

The Philadelphia Federal Reserve Bank's manufacturing activity index for February, which reflects the region's manufacturing conditions, recorded 16, down from 23.2 the previous month and below the expected 19. New housing starts in the U.S. for January also declined 4.1% month-over-month to a seasonally adjusted annual rate of 1,638,000 units.

Despite geopolitical tensions surrounding Ukraine, New York crude oil prices fell amid growing prospects for a nuclear deal (JCPOA - Joint Comprehensive Plan of Action) between Iran and the West. On the New York Mercantile Exchange, March West Texas Intermediate (WTI) crude closed at $91.76 per barrel, down $1.90 (2%) from the previous session.

However, fears of war between Ukraine and Russia limited the decline in oil prices. Craig Erlam, Senior Market Analyst at OANDA, said, "The oil market is very tight," adding, "Without the Iran nuclear negotiations, oil prices would already be in triple digits."