Investing / Stocks

Stock Market Reacts to Russia’s Invasion of Ukraine, Deepening a Correction That Was Already Underway — Is a Bear on Its Way?

Business graph with arrows tending downwards.

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Stock markets around the world plunged early Thursday following Russia’s invasion of Ukraine, battering indexes that were already in a correction as tensions escalated in the region.

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Dow futures tanked more than 700 points late Wednesday following the invasion, Yahoo Finance reported. S&P 500 futures and Nasdaq futures also recorded big losses, while stock markets in Europe and Asia were sharply lower Thursday.

The S&P 500 on Wednesday deepened its correction — which means a loss of 10.25 % from its recent peak — as Microsoft, Cisco Systems and other technology stocks sold off, the AP reported. Retail stocks such as Amazon and Starbucks also logged heavy losses.

The S&P 500’s correction was its first since the spring of 2020, when the COVID-19 pandemic rattled the global economy. As AP noted, that correction eventually became a bear market — a decline of 20% or more — as the S&P 500 lost more than 30% of its value in about a month.

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The situation in Ukraine has caused similar worry on Wall Street, compounded by looming Federal Reserve interest rate hikes designed to tame inflation that has been rising at its fastest pace in four decades.

Could the U.S. be headed for another bear market as Russia enters war against Ukraine? Even with so many forces colliding at the same time, that’s no sure thing based on recent history. Only one of the past seven corrections have marked the start of a bear market, Reuters reported.

But there are signs that a bear might already be on its way. Last month the small-cap Russell 2000 index confirmed it was in a bear market, Reuters noted, though some analysts believe small stocks are in the process of bottoming out.

In January, the Nasdaq confirmed that it had entered its fourth correction since the start of the pandemic. As of Wednesday it was down almost 17% from its record high close in November, which means it is moving closer to a bear market.

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About the Author

Vance Cariaga is a London-based writer, editor and journalist who previously held staff positions at Investor’s Business Daily, The Charlotte Business Journal and The Charlotte Observer. His work also appeared in Charlotte Magazine, Street & Smith’s Sports Business Journal and Business North Carolina magazine. He holds a B.A. in English from Appalachian State University and studied journalism at the University of South Carolina. His reporting earned awards from the North Carolina Press Association, the Green Eyeshade Awards and AlterNet. In addition to journalism, he has worked in banking, accounting and restaurant management. A native of North Carolina who also writes fiction, Vance’s short story, “Saint Christopher,” placed second in the 2019 Writer’s Digest Short Short Story Competition. Two of his short stories appear in With One Eye on the Cows, an anthology published by Ad Hoc Fiction in 2019. His debut novel, Voodoo Hideaway, was published in 2021 by Atmosphere Press.

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