Stock futures fell in overnight trading Thursday following a sharp reversal on Wall Street as investors continued to assess the risks stemming from Russia’s invasion of Ukraine.
Futures on the Dow Jones Industrial Average dipped 120 points. S&P 500 futures fell 0.4% and Nasdaq 100 futures traded 0.5% lower.
The market was initially spooked by Moscow’s invasion against neighboring Ukraine early Thursday morning local time, using land, air and naval forces. The S&P 500 was down as much as 2.6% during the session but closed up 1.5% higher despite the outbreak of violence.
The blue-chip Dow ended the day about 90 points higher after losing 859 points at its session low. The tech-heavy Nasdaq Composite rallied 3.3% in a stunning comeback after dropping nearly 3.5% at the lowest level of the day.
“Russia invading Ukraine has added to an already tense year, with investors selling first and asking questions later,” said LPL Financial Chief Market Strategist Ryan Detrick. “But it is important to know that past major geopolitical events were usually short-term market issues, especially if the economy was on solid footing.”
Oil prices settled well off their highs alongside the recovery in equities. Global oil benchmark Brent crude gained 2.3% to settle at $99.08 per barrel, after hitting the $100 level for the first time since 2014. The U.S. oil benchmark, WTI, settled the day 71 cents, or 0.77%, higher at $92.81 per barrel.
President Joe Biden rolled out a new wave of sanctions against Russia Thursday afternoon in a broad effort to isolate Moscow from the global economy. The White House has also authorized additional troops to be stationed in Germany as NATO allies look to bolster defenses in Europe, Biden said.
Despite Thursday’s wild intraday reversal, major averages are on track for their third negative week in a row amid escalated geopolitical tensions. The Dow is down 2.5% this week, on pace for its worst weekly performance since Jan. 21. The S&P 500 and the Nasdaq have fallen 1.5% and 0.6% this week, respectively.
All three averages are still in correction territory, or down 10% or more from their respective record highs. The Nasdaq opened Thursday’s session in bear market territory, down more than 20% from its record high in November
“While there may be some additional volatility in the short term, these dislocation events historically present opportunities, as long as recession doesn’t follow,” said Cliff Hodge, CIO at Cornerstone Wealth. “Higher energy prices will also support sticky inflation which may keep pressure on the Fed to stay on course.”