Ukraine reported on Friday that it had attacked a group of Russian soldiers they considered trespassing on their soil, and Wall Street immediately felt the repercussions. While there were selloffs by the panic-stricken, when all was said and done Wall Street had shown how resilient it can be as its indices bounced back and ended up for the week. The Dow fell just under 51 points to 16,662.91 and the NASDAQ went up just under 12 points to a fraction under 4,465. The S&P 500 index fell just over a tenth of a point and ended the week with a gain of just over 1 percent.
News hit the wire Friday morning stating that Russian military vehicles had crossed into Ukraine late on Thursday evening. Russia denied the situation, however Ukraine claimed to have destroyed most of the vehicles.
During the selloff on Friday there were sectors that remained strong. Energy stocks and utilities maintained their strength. Investors decided higher dividends were a better purchase than lower yielding Treasury bonds.
The markets are heavily invested not only financially, but emotionally, in the situation in Europe. Any major news, like an official declaration of war for instance, could hinder much of the growth of the last few years.
As tension in Ukraine seemed calm in the last week, Wall Street began to make gains. Friday’s news shook that calmness. As a result, traders were selling and trying not to go home Friday owning something that could potentially drop significantly over the weekend.
The ongoing escalation in Ukraine worries many traders and investors on Wall Street. The situation between Ukraine and Russia is not over by a long shot and things can not go back to the way they were. Any further escalation specifically by Russia will undoubtedly bring with it more sanctions from the U.S. and Europe. An already tense Russia will inevitably respond to these sanctions by bringing further upheaval to an already distraught Ukraine.
Russia continues to add fuel to the fire by building up forces at the border. NATO estimates that 20,000 troops have already been sent there. Attempts by Russia to ease the situation under the guise of humanitarian efforts will not to be tolerated.
Wall Street still seems to be the better haven for investors in comparison to Europe’s financial markets. Germany, Europe’s largest economy, is facing issues as it does business with Russia, and it appears that the issues are being affected by the ongoing conflict. The DAX closed down 1.44 percent after being up 1.1 percent prior to the news mid-morning.
Wall Street was having a good morning but was deeply affected when news of the escalation in the Ukraine came out. The Dow Jones was trading up over 70 points at around 10:30 AM, but by noon it had lost those gains and was trading more than 100 points lower than when it began the day. To the experienced Wall Street observer, and for those not feint of heart, these fluctuations are an indication of an opportunity. Many, as the market indicated, saw these opportunities and made the buy call. In these market conditions there is surely money to be made by those with the experience, understanding and financial capacity to see a good deal and strike. If any further and more violent escalation were to incite, however, the losses could prove to be titanic in proportion.
By Steve Salazar