Ukraine battles rattle stocks in US
Reports that Ukrainian forces attacked Russian military vehicles that had crossed the border rattled US stock markets, knocking them down in the afternoon and sending traders into the safety of US government bonds.
By the end of the day, the Standard & Poor’s 500 index was back to where it started as investors realised that a wider conflict was not under way.
John Canally, chief economic strategist at LPL Financial, said it was understandable that traders dropped stocks in response to the flare-up. “Anyone who doesn’t want to lose their job over the weekend sells first and asks questions later,” he said.
Mr Canally suspects the dispute between Russia and Ukraine will probably follow the pattern of recent months. Worrying headlines will be followed by soothing speeches. “We’ve been here before,” he said.
The S&P 500 index fell 0.12 of a point to 1,955.06. It ended the week with a gain of 1.2%.
The Dow Jones industrial average fell 50.67, or 0.3%, to 16,662.91, while the Nasdaq composite gained 11.93 points, or 0.3%, to 4,464.93.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said one reason world events seem to be driving trading recently is that there is a lack of anything else for traders to focus on. All but a handful of big companies have turned in second-quarter results already, and no major economic reports came out this week.
“For the moment, geopolitical events seem to hold the interest of the few people at their desks in mid-August,” he said.
The news crossed at mid-morning Eastern time that a column of Russian armoured carriers had crossed into Ukraine late on Thursday. Ukraine claimed that its artillery fire destroyed most of the vehicles, but Russia denied that it happened.
The reports upended major European markets, turning gains into losses. Germany’s DAX dropped 1.4%, after climbing 1.1% earlier. France’s CAC 40 lost 0.7%.
The yield on the 10-year Treasury note plunged as low as 2.30%, the lowest since June 2013, as traders seeking safety shifted money into US government bonds. In late afternoon trading the yield climbed back to 2.34%, still down from 2.40% late on Thursday.
Among companies in the news, Monster Beverage soared 30% after Coca-Cola announced plans to pay two billion dollars for a stake in the maker of caffeinated drinks. The deal comes as Coca-Cola’s flagship soft drinks business is flagging and “energy drinks” have become popular. Monster jumped 21.84 dollars to 93.49.
Supervalu, a grocery store chain, said hackers gained access to its computer network for handling credit-card transactions. The company said it was not yet sure if customers’ account numbers and other information were stolen. Supervalu fell 28 cents, or 3%, to 9.31.
After the market closed on Wednesday, Nordstrom reported a slight drop in earnings as well as sales that fell just short of analysts’ estimates. The department-store’s stock slid 3.58, or 5%, to 65.11.
In commodities trading, Benchmark US crude oil rose 1.77 to 97.35 dollars a barrel.
The price of gold fell 9.50 to 1,306.20 dollars an ounce. Silver fell four cents to close at 19.53 an ounce and copper edged up a penny to 3.10 a pound.
