Finance

Stock futures rise as investors monitor Russia-Ukraine war, Fed’s next move

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, March 11, 2022.
Brendan McDermid | Reuters

Stock futures rose in overnight trading Sunday ahead of an important week as the Russia-Ukraine war continues to escalate and the Federal Reserve could hike rates for the first time since 2018.

Futures on the Dow Jones Industrial Average gained 150 points. S&P 500 futures climbed 0.5% and Nasdaq 100 futures traded 0.6% higher.

Fighting has intensified around Ukraine’s capital, Kyiv, while Russian forces bombard cities across the country, killing civilians who are unable to escape. The financial fallout of stiff Russian sanctions will come into sharper focus in the coming days ahead of a scheduled sovereign bond payment.

Meanwhile, the Fed is expected to raise its target fed funds rate by a quarter percentage point from zero at the end of its two-day meeting Wednesday. Investors are also looking to the central bank for its new forecasts for rates, inflation and the economy, given the uncertainty from the escalated geopolitical tensions.

“At the moment, the Fed is expected to be cautious when it comes to interest rate policy in 2022, given the conflict in Ukraine,” Lindsey Bell, chief markets and money strategist at Ally. “The conflict is adding complexity to the Fed’s already difficult job. The central bank will likely remain data-dependent as it makes rate decisions throughout the year.”

The Dow fell 2% last week, suffering its fifth negative week in a row. The S&P 500 and the Nasdaq Composite dropped 2.9% and 3.5% last week, respectively, both posting their biggest weekly loss since Jan. 21.

Major averages have all dipped into correction territory as geopolitical risks and inflation fears sent asset prices falling. The blue-chip Dow is down nearly 11% from its record high, while the S&P 500 has fallen almost 13% from its all-time high. The tech-heavy Nasdaq has borne the brunt of the sell-off, falling more than 20% from its record high in November.

“The near-term risk/reward is positive if for no other reason than the tape just had about every bit of negative news thrown at it and still couldn’t sustain a material break below the 4200 level,” said Adam Crisafulli, founder of Vital Knowledge.

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