Stock Market: The Worst Is Yet to Come. So Is a Swift Snapback.

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Traders at the New York Stock Exchange on Monday, Feb. 28.

Michael Nagle/Bloomberg

It’s the end of the world as we know it. The stock market, however, isn’t going anywhere.

The last full trading week of February ended with optimism that Russia’s invasion of Ukraine would end quickly and not become a global issue. How wrong we were. The scenes out of Ukraine have been devastating, and while resistance has been stiff, Russia’s tactics have gotten more extreme. Europe has rallied together in response, but sanctions don’t look like they will bring a speedy end to the war.

No wonder, then, that the stock market had a tough week. The

Dow Jones Industrial Average
shed 1.3%, its fourth week of losses in a row, while the

S&P 500
also shed 1.3% and the

Nasdaq Composite
fell 2.8%.

In moments like these, it’s easy to feel despondent, both for the state of the world and the market. And it does feel like the worst is still to come. Russia’s Vladimir Putin shows no signs of letting up, despite facing devastating measures that could wreck the Russian economy. Oil prices are spiking, inflation is surging, and the Federal Reserve is set to start hiking rates.

It’s enough to make one head for the safety of cash and even make Brazil look like an attractive destination for investment dollars.

But there’s a big difference between a correction and a full-fledged bear market, which is usually accompanied by a recession—and the U.S. economy may be sturdier than many expect. Take oil prices. With West Texas Intermediate crude, the U.S. benchmark, surging past $110 a barrel and more gains in sight, many observers have pointed to the fact that higher oil prices have often preceded recessions. But that wasn’t the case in 1987, 1996, 2011, or 2018, when oil spiked but recessions didn’t occur, observes…

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