Close: Russia-Ukraine headlines and month-end activity drive volatile session

The S&P 500 declined 0.3% on Monday in a volatile session driven by Russia-Ukraine headlines. The Dow Jones Industrial Average fell 0.5%, while the Nasdaq Composite (+0.4%) and Russell 2000 (+0.4%) both gained 0.4%, thanks to a late-session push.

The financials (-1.5%), real estate (-1.8%), consumer staples (-1.3%), and materials (-1.2%) sectors underperformed with losses over 1.0%. Conversely, the energy sector (+2.6%) jumped over 2.0% amid higher oil prices ($95.53, +3.94, +4.3%), followed by industrials (+0.7%), consumer discretionary (+0.6%), and utilities (+0.4%) with more modest gains.

The market got off to a weak start after the U.S. and Western allies expanded sanctions against Russia over the weekend. They blocked select Russian banks from the SWIFT financial transactions system and prevented Russia’s central bank from accessing its foreign currency reserves.

In turn, the ruble plunged against the dollar, Russia’s central bank hiked its key rate to 20.0% from 9.5% to protect the ruble, and President Putin placed Russia’s nuclear forces on high alert. Russia also closed its stock market for the day.

Despite the negative-sounding developments, the S&P 500, Nasdaq, and Russell 2000 resiliently made their way into positive territory in the morning. Investors, however, faded the turnaround, and stocks pushed to session lows on news that Russia vowed a harsh response to the sanctions.

Stocks bounced off session lows in the last 30 minutes of action, exuding month-end rebalancing activity since there wasn’t a specific news catalyst to account for the positive price action. The S&P 500 ended the month with a 3.1% decline.

The Treasury market was less volatile in the sense that yields stayed sharply low the entire session. Demand was driven by safe-haven interest, short-covering activity, growth concerns, and a belief that the Fed could sound less hawkish in its next policy meeting. The fed funds futures market is heavily favoring a quarter-point hike in March instead of a half-point hike.

The 2-yr yield dropped 16 basis points to 1.43%, and the 10-yr yield dropped 15 basis points to 1.84%. The U.S. Dollar Index increased 0.1% to 96.75. The CBOE Volatility Index (VIX) increased 9.3% to 30.15 amid increased hedging interest, although the VIX did close off session highs (33.51).

Reviewing Monday’s economic data:

  • The Chicago PMI for February decreased to 56.3 ( consensus 62.0) from 65.2 in January.
  • The Advance report for International Trade in Goods for January showed a deficit of $107.6 billion, versus a revised $100.5 billion (from $101.0 billion) in December. The Advance report for Retail Inventories for January rose 1.9%, while the Advance report for Wholesale Inventories for January rose 0.8%.

Looking ahead, investors will receive the ISM Manufacturing Index for February, Construction Spending for January, and the final IHS Markit Manufacturing PMI for February on Tuesday.

  • Dow Jones Industrial Average -6.7% YTD
  • S&P 500 -8.2% YTD
  • Russell 2000 -8.8% YTD
  • Nasdaq Composite -12.1% YTD


  • Europe: DAX -0.7%, FTSE -0.4%, CAC -1.4%
  • Asia: Nikkei +0.2%, Hang Seng -0.2%, Shanghai +0.3%


  • Crude Oil +3.75 @ 95.34
  • Nat Gas -0.05 @ 4.42
  • Gold +11.00 @ 1899.90
  • Silver +0.30 @ 24.38
  • Copper -0.01 @ 4.48
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