Major U.S. Indices Fell by 3% in February Amid Russia-Ukraine Conflict

Equities sink worldwide while grains rise, oil hits $101/bbl

Stocks worldwide continue to plummet as a result of Russia's war on Ukraine, while crude oil soars past $101 a barrel and grains like corn and wheat advance. Financial sanctions are beginning to bite, with companies and governments around the world placing restrictions on activity in Russia.

Key Takeaways

  • Stocks worldwide continue being pummeled as a result of Russia's war on Ukraine; with companies placing restrictions on business activity in Russia.
  • Safe havens like gold and government bonds rose, while bond yields sank.
  • Crude oil passed $101 a barrel, prices of grains rose and Target shares gained 11%.

All three of the major U.S. stock indexes are starting March lower, following the European Stoxx 600. For the month of February, the S&P 500 fell over 3%, the Dow lost over 3.5%, and the Nasdaq dropped 3.4%.

Oil gained as members of the International Energy Agency (IEA) weigh an agreement on releasing supplies from global reserves. The euro fell against the dollar, and the ruble continued shedding value.  

Cryptocurrencies have been on the rise, with the price of Bitcoin surging close to 17% above $44,700.

An increasing number of U.S. businesses are placing restrictions on business activity in Russia or limiting exposure, including The Walt Disney Co. (DIS), Facebook parent Meta Inc. (FB), Alphabet Inc.'s Youtube (GOOG), Visa Inc. (V), and Mastercard Inc. (MA).

Companies expected to report include Hewlett Packard Enterprise (HPE), and Salesforce.com Inc. (CRM) Target Corp. (TGT) announced it expects sales growth to continue this year, as it reported a 9% jump in holiday quarter revenue. AutoZone Inc. (AZO) shares rose on better-than-expected earnings.

Later today, the Institute for Supply Management (ISM) is expected to show its index of manufacturing activity rose to a reading of 58 in February after falling in January to a 14-month low of 57.6. A separate report from the Commerce Department is likely to show that construction spending increased 0.2% in January, following a similar percentage gain in December. 

Quick Hits: Today's Headlines

The New York Stock Exchange (NYSE) and the Nasdaq Stock Market halted trading of several U.S.-listed Russian stocks in light of sanctions imposed on the country following its invasion of Ukraine. NYSE said it halted trading of Russian telecom operator Mobile TeleSystems (MBT), steel company Mechel PAO (MTL), and real estate company Cian (CIAN), while Nasdaq halted trading of search-engine operator Yandex (YNDX) and online retailer Ozon Holdings Plc (OZON).

HP Inc. (HP) raised its profit outlook for the year, despite concerns about the impact of Russian sanctions. Strong sales of computers helped profits but HP said it would take a hit to its bottom line in the current quarter from Russia’s invasion of Ukraine.

Shares of electric vehicle maker Lucid Group Inc. (LCID) sank after it slashed its vehicle production for the current year by 40%. The company cited supply chain constraints for cutting output from 20,000 units down to 12,000 to 14,000 vehicles.

The Federal Trade Commission (FTC) is reportedly preparing for a possible challenge to Amazon’s $8.5 billion deal to buy MGM Studios. The agency could decide whether to bring the case in the next few weeks.

Zoom (ZM) shares fell after the video company provided a disappointing revenue forecast for the first quarter and full year. The 21% growth for the fourth quarter is the slowest on record for the company, and ramps up pressure on Zoom to show it can continue to grow beyond the pandemic boom.

Grocery store chain Albertsons Companies Inc. (ACI) says its board has started a strategic review to consider its future and improve value to shareholders. The move comes just two years after the supermarket chain that owns Safeway and Jewel-Osco went public. 

The Big Story: Citi's Russia Exposure

Citigroup Inc. disclosed its total exposure to Russia amounted to nearly $10 billion at the end of 2021. That is higher than previously suggested, and raises questions about whether the bank will have to set aside funds to cover potential losses.

Citigroup listed Russia as 21st among its top 25 country exposures, with $5.4 billion of loans, securities, and funding commitments as of the end of December. Citigroup listed other exposures, including $1 billion in cash at the Bank of Russia and $1.8 billion of reverse repos. The bank also said it had $1.6 billion in exposure to additional Russian counterparties.  

Some of the funds belong to a consumer bank that Citi has been trying to sell. It operates three branches in Moscow, and two in St. Petersburg. The recently announced sanctions on Russia could make it more difficult to sell the consumer bank. 

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Citi vs. S&P 500 12 Month.

Citigroup is the U.S. bank with the biggest exposure to Russia by far. However, the bank does have a total of over $2 trillion in assets.  

Citigroup (C) shares fell nearly 5% yesterday, and are down 6% so far this year.