The Washington PostDemocracy Dies in Darkness

Dow drops more than 600 points as Russia-Ukraine tensions weigh on markets

The Nasdaq sinks nearly 2.9 percent and S&P 500 sheds 2.1 percent as hopes fade for a peaceful resolution

Traders work the floor of the New York Stock Exchange this week. (Spencer Platt/Getty Images)

The Dow plunged more than 600 points amid a broad sell-off Thursday as the Russia-Ukraine crisis sent investors scrambling for cover.

Stocks have oscillated in tandem with headlines in previous sessions, and Thursday was no different after the State Department said Russia had expelled the deputy chief of mission to the U.S. Embassy in Moscow. U.S. and NATO officials warned that there’s been no sign of de-escalation at the border.

“Every indication we have is they’re prepared to go into Ukraine, attack Ukraine,” President Biden told reporters Thursday at the White House.

By the market’s close, the tech-heavy Nasdaq skidded 407.38 points, or nearly 2.9 percent, to land at 13,716.72. The S&P 500 index shed 94.75 points, or 2.1 percent, to end at 4,380.26. The Dow Jones industrial average lost 622.24 points, or nearly 1.8 percent, to finish at 34,312.03.

All three indexes are down 5 percent or more year to date, according to MarketWatch.

U.S. says Russian claim of pullback around Ukraine is ‘false,’ accuses Moscow of adding troops instead

Typically, markets tend to look through geopolitical tensions. But investors have been keeping a wary eye on the standoff given Russia’s role as one of the world’s biggest energy producers. The conflict could have significant ramifications for the economy, including exacerbating already high inflation. Biden has made clear that the United States and its allies would respond “decisively” in the event of a Russian invasion and impose “severe” costs.

“It’s no wonder investors don’t know which way to turn,” Craig Erlam, senior market analyst with OANDA, said Thursday in comments emailed to The Post. “Clearly, tensions are going to remain until we see a confirmed and substantial reduction of troops at the border.”

Biden’s warning came just days after Moscow gave off signals it was easing off its threats against Ukraine. But sentiment has since soured: Russia is continuing military exercises close to Ukraine’s border that intelligence officials fear could give the cover for an invasion. The exercises are due to end Sunday. In the meantime, Russian forces continue to build and move toward Ukraine’s frontier, Defense Secretary Lloyd Austin told reporters in Brussels, despite the Kremlin’s promises that they are drawing down their troops.

On Thursday, Vice President Harris arrived in Germany for the Munich Security Conference, a high-profile annual gathering where Russia’s intentions will be the major focus of discussion. Germany’s Foreign Ministry announced Wednesday that the Group of Seven foreign ministers will hold crisis talks about Ukraine on the sidelines of the Munich meeting this weekend.

Jitters were shared by overseas markets. Asian markets logged a mixed session, with Japan’s Nikkei 225 closing 0.8 percent lower and Hong Kong’s Hang Seng Index edging up 0.3 percent. European markets closed in negative territory across the board, with the benchmark Stoxx 600 index shedding nearly 0.7 percent.

Inflation also remained sharply in focus in the ashes of fiery reports on wholesale and consumer price increases. The release of Federal Reserve minutes Wednesday offered little insight into the central bank’s immediate plans for raising interest rates, its primary weapon against inflation. Higher rates can limit business activity, which often hits stocks — especially highflying companies — hard.

“Geopolitical concerns along with Fed policy continue to drive extremely negative sentiment,” Ivan Feinseth, chief investment officer at Tigress Financial Partners, said Thursday in comments emailed to The Post. Still, money is pouring into the market, Feinseth noted, with equity inflows hitting record levels so far this year. “Rallies on the slightest sign of good news continue to indicate that stocks want to move higher.”

Investors pored over economic data for a better picture of how inflation is weighing on the recovery. A rosy retail sales report offered some good news Wednesday, with January sales spiking 3.8 percent from the previous month, the latest piece of evidence that omicron’s surge did less damage to the economy than some had feared.

On Thursday, the Labor Department reported that 248,000 Americans had filed initial unemployment claims, an increase of 23,000 over the previous week’s revised level. Independent Advisor Alliance chief investment officer Chris Zaccarelli said the 10 percent increase in claims was worse than expected, possibly contributing to investors’ sullen mood.

Still, the jobless claims data suggests the job market remained resilient despite spiking coronavirus cases in December and January. While the number of Americans seeking unemployment has swelled in recent months, the job market has avoided the sharp declines it experienced due to earlier coronavirus variants.

Corporate earnings, meanwhile, provided investors with some measure of confidence, starting with better-than-expected results from Walmart. The big box giant said shoppers seem to be weathering the storm of inflation well. Walmart’s shares jumped 4 percent, to $138.88 a share.

“We know consumers are focused on inflation, but we’re not seeing major changes in shopping patterns,” Walmart’s Chief Financial Officer Brett Biggs told Yahoo Finance on Thursday.

Oil prices edged lower amid the conflicting signals from Ukraine’s border. Brent crude, the international oil benchmark, was trading at just under $93 per barrel, level on the day. West Texas Intermediate crude, the U.S. oil benchmark, was trading about 2.1 percent lower, around $91.59 per barrel.

Gold, an investor safe haven in times of turbulence, edged up to its highest level since June amid the tensions, gaining more than 1.5 percent to trade just above $1,900 per troy ounce.

Government bonds, which have seen incredible upward pressure due to inflation and soaring geopolitical tensions, edged lower Thursday. The yield on the 10-year U.S. Treasury note slumped back below the 2 percent threshold, hovering around 1.97 percent.

Aaron Gregg and Eli Rosenberg contributed to this report.