New York Stock Market Falls Amid Rising Russia-Ukraine Tensions... Increased Demand for Safe-Haven Assets Like Bonds and Gold

Ukraine Attacks Russian Mainland with Long-Range Missiles
Russia Plays 'Nuclear Card'
Safe-Haven Demand Drives Down Government Bond Yields
Focus on Nvidia Earnings on the 20th

The three major indices of the U.S. New York Stock Exchange are falling in early trading on the 19th (local time). Investor sentiment has sharply contracted as geopolitical tensions escalate following Ukraine's attack on Russian mainland with long-range missiles supported by the U.S. Investors are moving en masse from risky assets like stocks to safe-haven assets such as government bonds and gold.

As of 9:58 a.m. in the New York stock market, the blue-chip-focused Dow Jones Industrial Average is down 0.81% from the previous trading day, standing at 43,038.69. The large-cap-focused S&P 500 index is trading 0.46% lower at 5,866.42, and the tech-heavy Nasdaq index is down 0.2% at 18,754.61.

In the early hours of the day, Ukraine attacked Russian territory with ATACMS missiles supported by the U.S. The Russian Ministry of Defense stated that Ukraine launched six ATACMS missiles at a military facility in Bryansk, a western border area of Russia, intercepting five of them. This follows U.S. President Joe Biden's recent approval for Ukraine to use long-range missiles provided by the U.S. to strike deep into Russian mainland.

In response, Russia played the "nuclear card." It revised its nuclear use doctrine to allow the use of nuclear weapons by a non-nuclear state supported by a nuclear-armed country. This move is effectively aimed at Ukraine, which is backed by Western nuclear powers such as the U.S., the U.K., and France.

Andrey Tuyeny, Chief of Trading at Saxo Bank France, analyzed, "So far, market reactions have been restrained," adding, "Some are still taking a wait-and-see stance."

As geopolitical tensions rise, preference for safe-haven assets strengthens, pushing up government bonds and gold futures. As bond prices rise, bond yields are falling. The U.S. 10-year Treasury yield, a global benchmark for bond yields, dropped 6 basis points (1bp = 0.01 percentage points) from the previous day to 4.34%, while the 2-year Treasury yield, sensitive to monetary policy, fell 5 basis points to 4.22%.

Amid increased market volatility, investors' attention is focused on Nvidia's earnings announcement. The key catalyst likely to determine the stock market direction this week is Nvidia's earnings report after market close on the 20th. If Nvidia reveals better-than-expected earnings and outlook, it could provide a rebound opportunity for the market, which has cooled since the Trump rally. Wall Street is closely watching demand forecasts for Nvidia's latest AI chip, Blackwell.

So far, corporate earnings have been relatively strong. According to market research firm FactSet, 93% of S&P 500 companies have reported quarterly earnings, with three-quarters beating earnings per share (EPS) estimates and 60% exceeding revenue forecasts.

Wall Street opinions diverge on the future market direction. The previous day, Morgan Stanley predicted a 10% rise in the S&P 500 next year, driven by pro-business policies under a potential second term of Donald Trump. Conversely, RBC Capital Markets warned that a downturn has already begun due to concerns over Trump’s second-term tariff policies, forecasting the S&P 500 could fall by up to 10%.

Andrew Slimon, Head of Equity Advisory at Morgan Stanley Investment Management, stated, "The market has risen on the back of a strong economy, continued Fed rate cuts, and robust Q3 earnings," adding, "Investors will not see the kind of downturn they want."

By individual stocks, Walmart is up 3.19%, driven by better-than-expected earnings and upward revisions in consumer spending outlook. Nvidia, which will report earnings this week, is up 1.49%. Alphabet, Google's parent company, is up 0.38% despite the Department of Justice's push to force the sale of Chrome. Earlier, the DOJ decided to request a U.S. court to compel Google to divest the Chrome browser for antitrust violations.

International oil prices are rising. West Texas Intermediate (WTI) crude oil is up $0.36 (0.52%) from the previous trading day, trading at $69.53 per barrel, while Brent crude, the global oil price benchmark, is up $0.37 (0.5%) at $73.67 per barrel.