With War in Europe, Investors Flee Stocks, Seek Refuge in Gold, Bonds

Oil and gas prices leap while stocks drop globally

Russia's invasion of Ukraine threw global markets into turmoil. European stocks plummeted while, in the U.S., the Dow Jones joined the S&P 500 in a correction and the Nasdaq entered bear territory.

U.S. investors—already concerned with rising inflation and a rate hike likely coming from the Fed in March—are pulling money out of stocks and into havens, including bonds, gold, silver, and the U.S. dollar. The price of the 10-year Treasury note is rising, with the yield falling to 1.94%. The so-called “fear index,” the VIX, is up 10%. 

Key Takeaways

  • Russia's invasion of Ukraine threw global markets into turmoil, as European stocks plummeted.
  • In the U.S. the Dow Jones joined the S&P 500 in a correction and the Nasdaq entered bear territory.
  • Oil and natural gas prices jumped.

The Dow is down more than 600 points. The Nasdaq briefly turned positive before returning to negative territory. The pan-Europe Stoxx 600 index, Germany's DAX, and the UK's FTSE all fell more than 3%, while Russia's MOEX cratered, losing more than 17%.

The news sent oil futures up to $105 a barrel for a short time. Crude is now more than $96 a barrel. Natural gas and gasoline prices are up 5%. Prices for wheat and other agricultural commodities are rising (more below).  

Shares of all but three of the companies in the Dow are falling. Financial company shares are tumbling; JPMorgan Chase & Co. (JPM) is the worst-performing stock in the index. Shares of travel-related companies are dropping as the conflict in Ukraine is raising concerns about travel safety and higher fuel costs. 

Cryptocurrencies, which are seen as riskier assets, are trading lower. The price of Bitcoin is down 5%.  

Shares of Moderna Inc. (MRNA) and Live Nation Entertainment Inc. (LYV) are among the few stocks gaining ground after both reported better-than-expected quarterly results and strong 2022 guidance. 

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Chart of the Day: Grain Gains

grains

Russia’s attack on Ukraine has sent wheat prices soaring to levels not seen in more than a decade. 

Wheat futures are rising more than 5%, hitting limit up at the Chicago Board of Trade (CBOT). Wheat is trading at more than $9 a bushel. It hasn’t been that high since February 2008.

Russia is the world’s largest exporter of wheat, and Ukraine is among the largest. 

The price of corn is also jumping, gaining almost 4% after hitting limit up during trading today. Ukraine and Russia are among the top-10 exporters of corn. 

Futures for soybeans and other grains are higher as well.

Stock of the Day: Live Nation Entertainment (LYV)

Live Nation Entertainment shares rose after it reported fourth quarter revenue and income that beat analysts’ estimates, and the concert promoter predicted 2022 would be its best year ever.

Live Nation Entertainment posted sales of $2.7 billion in the period, more than 10 times greater than in 2021, when live performances were severely limited by COVID-19. Adjusted operating income came in at $160 million.

The company indicated 45 million tickets have already been sold for events this year, up 45% from the same period in 2019. Pricing for its top-10 shows is more than 20% higher than two years ago as well. 

CEO Michael Rapino said the tailwinds to the business have never been so strong, and he believes we are at the beginning of what will be the strongest multi-year period ever in the concert industry.

Record-Setting Year Predicted

He added he expects that in 2022 Live Nation Entertainment will “deliver record financial performance overall and for each division.”

Shares of Live Nation Entertainment are gaining 6%, and they’re trading near their all-time high set in early November.