Stocks fell this morning as tensions on the Ukrainian border flared and corporate earnings left investors feeling underwhelmed. The Dow, S&P, and Nasdaq Composite all endured substantial losses through noon.
Yesterday, Russia claimed that it would remove some of its troops from the Ukrainian border. As of today, though, Russia has not withdrawn any of its forces, causing some analysts to wonder if it will actually attempt to deescalate at all.
“Markets continue to watch events in Ukraine, cycling back and forth between risk-on with the lessening of tensions and risk-off as tensions increase,” said Independent Advisor Alliance CIO Chris Zaccarelli.
“This morning, markets are concerned about the Russian troop buildup and a lack of trust in Putin’s declaration that they are beginning to remove troops from the region.”
Earlier today, Russia expelled the deputy US ambassador from the country and its Ministry of Foreign Affairs website went offline.
These recent events have traders asking whether an invasion truly is “imminent” like the US government has been claiming for weeks. Thus far, no formal military action has occurred.
But that didn’t stop US officials from issuing yet another “imminent invasion” warning just a few hours ago.
“Our goal is to convey the gravity of the situation. The evidence on the ground is that Russia is moving toward an imminent invasion. This is a crucial moment,” said Linda Thomas-Greenfield, US Ambassador to the United Nations, on a call with reporters.
US Secretary of State Antony Blinken then echoed Thomas-Greenfield’s remarks in a United Nations Security Council meeting.
“Now, I’m mindful that some have called into question our information, recalling previous instances where intelligence ultimately did not bear out,” Blinken said, recognizing that the US’s “imminent invasion” warnings of the past were inaccurate.
Blinken continued, adding that he was “here today not to start a war, but to prevent one.”
President Biden weighed in on the situation as well.
“Every indication that we have is that they are prepared to go into Ukraine, attack Ukraine,” Biden said to reporters while leaving the White House.
Outside of the ongoing Russia/Ukraine tensions, the market also digested some major earnings “misses” from two high-flying tech firms.
Palantir (NYSE: PLTR) shares fell over 11% after the company missed on profits while chipmaker Nvidia (NASDAQ: NVDA) dropped roughly 8% despite beating its earnings per share (EPS) estimates. Like many other companies this earnings season, NVDA provided disappointing forward guidance after a better-than-expected quarter.
And that’s really become the most unsettling trend of the last few weeks; the fact that a large number of corporations are predicting a rough 2022. Of course, these companies don’t want to set unrealistic goals.
The reality is that many of them will end up surprising to the upside next earnings season because of their conservative guidance.
But if America’s top stocks can’t hit their quarterly targets, even after revising them lower, that could very well kill the bull market as investors realize a slowdown has arrived just a few weeks after the first rate hike.
That’s the kind of thing that should worry investors. Not a potential Russian invasion of Ukraine, which still seems unlikely given how poorly that would turn out for Russia.
So, as February progresses, it might make sense for traders to “keep their eye on the ball,” or in this case, interest rates, with March (and the first rate hike) drawing closer.
All while inflation climbs to new, landmark levels and the major indexes remain well below their recent highs.
