Stock futures opened lower on Thursday after a sell-off during the regular trading day, with geopolitical concerns ramping further to trigger a risk-off move in markets.
Contracts on the S&P 500 fell. The index dropped more than 2% earlier, while the Dow dropped 1.8% for its worst day since November. Technology and growth stocks renewed declines, and the Nasdaq Composite dropped 2.9%. The CBOE Volatility Index (VIX), or “fear gauge,” spiked more than 15% to top 28.
Another apparent reversal in the state of the conflict in Russia and Ukraine stoked further uncertainty and volatility for market participants. President Joe Biden told reporters that the threat of a Russian invasion of Ukraine was “very high” in the coming days, and that Russia had not in fact moved troops out of Ukraine despite the country’s suggestions of a deescalation earlier this week. Crude oil prices dropped Thursday afternoon to pause a recent run-up even as Russia-Ukraine tensions resurged.
“The two things we’re most concerned about right now in terms of headwinds for the market and causes for volatility, are clearly tensions with Russia-Ukraine … and then clearly, our concern over not just inflation but what the monetary policy response to that inflation is going to be,” Art Hogan, National chief market strategist, told Yahoo Finance Live on Thursday. “And those headlines have changed quite a bit too.”
“We’ve gone from thinking the Fed would be very, very deliberate in their actions starting in March and telegraph everything … to having some outliers on the committee talking about being very aggressive, a lot more aggressive than what’s priced into the market,” he added. “Every day the story changes a bit.”
Treasury yields fell across the curve on Thursday, with the 10-year yield dipping back below 2%. This came as markets priced in a lower probability of a front-loaded 50 basis-point interest rate hike from the Federal Reserve in March, with investors looking past hawkish commentary from St. Louis Fed President James Bullard calling for a more aggressive path on interest rates.