The Russia Issue Is Hurting the Stock Market. How Things Could Get Worse.

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President Joe Biden spoke Tuesday about Russian military activity near Ukraine.

Brendan Smialowski/AFP via Getty Images

While stocks are reeling in response to the Russia-Ukraine conflict, there isn’t full-blown panic. Several developments need to occur for the stock market to take another nosedive. 

Tuesday, the

Dow Jones Industrial Average,

S&P 500,
and

Nasdaq Composite
fell 1.4%, 1%, and 1.2%, respectively. But that was well up from the lows of the day for all three indexes.

The main fear for markets is that the U.S. and other countries will have to impose harsh sanctions on Russian exports of oil, which would limit the amount available globally. The price would rise, cutting into the spending power of consumers, who are already dealing with high inflation. 

That isn’t happening yet. President Joe Biden spoke Tuesday afternoon and didn’t announce any sanctions on Russian oil exports. He did unveil sanctions on two large Russian financial institutions, blocked off the country’s ability to issue sovereign debt in the West, and said sanctions on Russian elites will go into effect on Wednesday. Biden has also signed an executive order prohibiting new investment, trade and financing by the U.S. in separatist regions of Ukraine.

In order for the stock market to experience another downward jolt from here, there would have to be heavy sanctions on Russian oil. “Regarding Ukraine, investors will await the announcement of new sanctions from the west against Russia and depending on how severe they are, it could add to the selling pressure on stocks,” wrote Tom Essaye, founder of Sevens Report Research. 

One reason the Biden administration hasn’t yet imposed harsh restrictions is that Russia hasn’t been as aggressive as it could be. So far, the invasion of Ukraine hasn’t been full scale, which is why…

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