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Wall Street Opens Lower as Russia Rails Against Sanctions; Dow Down 400 Pts

Published 02/28/2022, 09:36 AM
Updated 02/28/2022, 10:17 AM
© Reuters

By Geoffrey Smith 

Investing.com --- U.S. stock markets opened lower on Monday as drastic new sanctions enacted by the West on Russia over the weekend drew a furious response and further threats of escalation from the Kremlin. 

By 9:40 AM ET (1440 GMT), the Dow Jones Industrial Average was down 392 points, or 1.2%, at 33,667 points. The S&P 500 was down 1.2% and the NASDAQ Composite was down 1.0%.

Earlier Monday, the U.S. Treasury said it would impose sanctions on the Russian Central Bank - a measure which, in conjunction with others taken over the weekend in Europe - will freeze over half of Russia's foreign reserves and severely limit its foreign trade. The Russian ruble fell over 20% against the dollar in response. President Vladimir Putin responded over the weekend by placing his strategic nuclear forces on high alert, while Russia's invading forces intensified their attacks on Ukraine's cities, striking residential areas with long-range missiles. 

Aviation stocks were among the worst hit: AerCap (NYSE:AER) stock fell 12.4% after it said it would halt leasing to Russia, a market that accounts for 5% of its revenue.

The escalation supported defense and energy stocks, with Lockheed Martin (NYSE:LMT) stock rising 4.6% and Raytheon (NYSE:RTX) stock rising 1.5%.  With oil prices surging again due to fears that supplies out of Russia - the world's second-largest exporter - will be disrupted, Exxon Mobil (NYSE:XOM) stock fell 0.8%, outperforming the broader market but still depressed by fears about its own exposure to Russia, where it operates the massive Sakhalin-1 oil field. 

Exxon's rival Chevron (NYSE:CVX) fared better, supported by news of a $3.15 billion acquisition of Renewable Energy Group (NASDAQ:REGI), whose stock rose 38%. By contrast, BP ADRs (NYSE:BP) fell 6.9% after it said it would exit its near-20% stake in Russian oil giant Rosneft immediately. The holding has generated a large part of BP's cash flow for the last seven years. 

There was also M&A news in the financial sector, where Toronto Dominion (TSX:TD) said it will buy First Horizon National (NYSE:FHN) for $13.4 billion, a 37% premium to Friday's close. The deal will make TD, which already has a sizeable presence in the U.S. through its Ameritrade unit, into the country's sixth-biggest lender, according to some estimates.

Financials were nonetheless hit by concerns about their exposure - direct and indirect - to Russia, and by the renewed fall in bond yields that will depress their lending margins. Citigroup (NYSE:C) stock lost 4.2%, while JPMorgan (NYSE:JPM) stock fell 3.3% and Bank of America (NYSE:BAC) stock fell 3.2%.

Despite the shock to financial markets out of eastern Europe, analysts still said U.S. equities were well supported by fundamentals. 

Fidelity analyst Naveen Malwal argued that the U.S. is likely not to get directly involved in the conflict, and that its economy "is still in a mid-cycle expansion" despite the headwind from higher energy prices. Malwal pointed to "strong consumer spending, a tight job market, and rising corporate profits."

 

Latest comments

TD bank 30 years ago Canada's 4th largest banks today North America 6th largest. Good on you TD.
Putin thought he may become "Putin the Great" but I think "Putin the Terrible" is more likely
Two countries leaders are aggressive in talking. Zelensky is also talking very aggressively. Tensions rise immediately. Again Russia will start Aerial Bombing. NATO forces also will come and it turns into mult national Atomic War.
there is always a quack in the room
There is always a quack in the room, too bad they always have weird names.
hello
baloney. these articles are wrong like most stuff the media puts out. sanctions aren't going to do a ********thing to Russia. they got off the Rothschild banking system in preparation for this. Ukraine is a puppet govt installed by the USA and its cronies. and we're making plans to out a Nato base there. if you were Putin you'd do the same thing
and dont forget American circus coin only buy yes this is America
Yet 87% of American $100 dollar bills are outside of America.  Americans don't use them but a lot of folks all over the world use them. As for your Russian Ruble hmm what it worth today a penny
American shorter funds f. all the eurozone American stocks run this is American circus is funny
I like how they use the dow because the number is greater. 30 stocks compared to the other 8000+ in other indexes 🤣🤣🤣
Putin is doing all this because China is backing him.
Another day of miracles for the laughingstock of the financial world, as the US Ponzi Scheme continues to make a mockery of the global investment system.
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