Categories: Family Office, Financial NewsPublished On: March 4th, 2022Comments Off on Market Update17.7 min read
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The market is still reacting to the conflict between Russia and Ukraine this week. The S&P 500 and the Dow Jones indexes fell by more than 10% from their historical closing highs—entering a correction stage, while the Nasdaq has fallen cumulatively 20%—entering a bear market.
The US stock market may test the January low after the last rally failed, as a 10% correction happens frequently in these situations. However, there is no need to panic as historical data shows that this is already the 33rd time since 1980 that the S&P 500 index has dropped by more than 10%. At present, the market has begun to rebound after falling consecutive days, but future fluctuations can be expected to intensify with the ongoing conflict between Russia and Ukraine.
While there is no need to panic, the war itself will still increase market volatility. Moreover, both Russia and Ukraine are also major exporters of raw materials, which may worsen inflation issues that were originally created due to supply chain problems. It likely won’t cause long-term impact.
The market expectation of the Federal Reserve raising interest rates by 0.5% in March has been greatly reduced due to the conflict between Russia and Ukraine. It is, however, still a possibility for the Fed to raise interest rates by 0.25%.
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