Markets “In A Nutshell” for February 28, 2022

Markets “In a Nutshell” for February 28, 2022

Investment Week at a Glance

Stocks finished mixed for the week.  The Dow Jones Industrial Average fell 0.10%, the S&P 500 was up 0.80%, and the NASDAQ rose 1.10%. Foreign stocks (MSCI EAFE) were down, falling 2.60%.  Bond prices were down for the week, with the 10-year U.S. Treasury ending the week at 1.97%.  (Data source: Wall Street Journal)

Russia Invades Ukraine

Last Thursday Russia began its much-anticipated invasion of Ukraine. Domestic markets were able to make it through the week with minimal losses on the Dow Jones and even saw gains on the S&P 500 and NASDAQ. This was a bit of a surprise to some because they figured the largest invasion in Europe since WWII would have caused markets to take a sizeable dip. In reality, the market was expecting this to happen, and now that there is clarity and no longer speculation on if it will happen the market knows what to price in. While volatility will continue in the coming weeks, as long as the war can stay isolated in Ukraine, markets typically do not have huge reactions to these types of wars.

Sanctions on Russia and Impact on Economy

With the invasion of Ukraine, nations around the world condemned Russia, and since Thursday sanctions have been placed daily on Russia as a deterrent to the war. These sanctions have impacted every sector of the Russian economy and even some individuals have had their assets frozen that are outside of Russia. From restrictions on Russian banks to not allowing commercial flights to fly in Russian airspace to pulling sporting events from Russia, the world has taken a stance against the war. As far as the US economy impact goes, trade between Russia and the United States was limited in the first place and Russia’s economy accounts for less than 2% of global GDP. The major impact for Americans is energy prices as energy prices are on the rise around the world as Russia accounts for roughly 11% of world oil production.

Quiz:

How did the S&P 500 perform in the year after Iraq invaded Kuwait? (Scroll Down for Answer)

 

1.     -7.8%
2.     -3.1%
3.       2.1%
4.       8.9%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Answer below.

 

 

Have a Great Week!

 

 

 

 

 

 

 

 

 

Answer:

4)   8.9%, the S&P 500 actually was up 8.9% in the year after Iraq invaded Kuwait.  Although there was short term market volatility, if you look at 1 year from the day of the invasion the market was able to still produce solid returns.