The major averages rose Thursday, erasing a steep declines from earlier in the day, as investors looked past Russia’s attack of Ukraine.
The S&P 500 traded 1.1% higher, after dropping more than 2.6% earlier in the session. The benchmark remains in correction territory more than 10% off its Jan. 3 record close. The 30-stock Dow fell about 50 points and briefly turned positive. The blue-chip measure is more than 10% off its record. The Nasdaq Composite was up roughly 3% after opening in bear market territory, down more than 20% from its record high in November. The Nasdaq has since traded out of that range.
Stocks experienced a stunning reversal during the trading day on Thursday. The Dow was down more than 850 points earlier in the session. The Nasdaq was down nearly 3.5% at one point.
Investors bought the dip on some of the biggest tech names. Amazon, Netflix, Alphabet and Microsoft all traded higher — erasing sharp declines from earlier in the day. Netflix rose nearly 5% and Microsoft added 3%. Alphabet and Meta Platforms rose 2.5% each.
President Joe Biden addressed Russia’s invasion of Ukraine on Thursday, announcing that the U.S. will introduce a new wave of sanctions against Russia in a broad effort to isolate Moscow from the global economy. The White House has also authorized additional troops to be stationed in Germany as NATO allies look to bolster defenses in Europe, Biden said.
“Today I’m authorizing additional strong sanctions, and new limitations on what can be exported to Russia,” Biden said. “This is going to impose a severe cost on the Russian economy both immediately and over time.”
Moscow launched the military action in Ukraine overnight Thursday. There were reports of explosions and missile strikes on several key Ukrainian cities including its capital, Kyiv. Russian President Vladimir Putin called the invasion “the demilitarization” of Ukraine and said Russia’s plans do not include the occupation of Ukrainian territories.
NATO, the most powerful military alliance in the world, is set to reinforce its presence on its eastern front following Russia’s invasion of Ukraine. (Investors can follow along CNBC’s live blog tracking Thursday’s developments in Russia’s attack on Ukraine.)
“Russia remains a part of world economy. We are not going to harm the world economy system we are a part of as long as we are a part of it,” Russian President Vladimir Putin said on Thursday.
The Russia invasion “is really worse than a baseline expectation that we had or the markets had. I would argue we are talking basically another 5% to 6% down which would put us close to 20% or bear market territory,” said Binky Chadha, chief U.S. equity and global strategist at Deutsche Bank,” on CNBC’s “Squawk Box” Thursday.
Oil prices also moved off their highs as the trading day progressed. Global oil benchmark Brent jumped 1% to around $92 per barrel, after the $100 level for the first time since 2014. The U.S. oil benchmark, WTI, traded about 1% higher around $92 per barrel after hitting just shy of $100 per barrel earlier in the session. Natural gas prices surged 2.9%.
Treasury prices increased and yields tumbled, with the benchmark 10-year note rate declining to 1.86% as investors sought safe-haven bonds. The move reversed a ramp in yields that took the 10-year well above 2% earlier in the session. Gold futures increased 1.5% to $1,939.80 an ounce as investors sought other safe havens. The Cboe Volatility index, a gauge of Wall Street fear, spiked to above the 37 level on Thursday, near hits highest levels of the year.
European stocks sold off sharply on Thursday. The pan-European Stoxx 600 dropped more than 3% to its lowest point of the year.
The VanEck Russia ETF, a U.S.-traded security which invests in top Russian companies, dropped nearly 16% on Thursday.
“The worst-case scenario of Russia invading Ukraine beyond the separatist regions is a shock to the equity and oil markets. The fallout could have sizeable negative impact on the European economy which would then dampen US activity modestly,” said Kathy Bostjancic, chief U.S. economist at Oxford Economics. “In the face of such uncertainty and negative economic fallout, the Fed is likely to raise the policy rate just 25bps in March, but it will still move forward.”
Banks were hit the hardest on Thursday. Bank of America and JPMorgan Chaselost more than 4.5% each. Boeing lost 3%. United Airlines was down more than 5%.
Among the stocks in the green were energy and defense stocks. Exxon Mobil was slightly higher. Enphase Energy rose more than 6%. Lockheed Martingained 1.5% and Raytheon Technologies was marginally higher.
Bitcoin turned positive alongside equities but was getting hammered earlier.
“How long this crisis takes to unfold will determine how much inflation, financial conditions, and growth will be impacted,” wrote Dennis DeBusschere of 22V Research.
The invasion comes as global equity markets were already reeling because of decades-high inflation stemming from the pandemic.
Markets have been worried about tighter Federal Reserve policy amid escalating inflation. Traders have adjusted their views on the Fed in recent days, with the likelihood of a 0.5 percentage point interest rate hike in March down to 17%, according to CME Group data.
Investors could be buying into equities because they believe the central bank may be slowing down the hike schedule due to the geopolitical turmoil.
— CNBC’s Christine Wang contributed to this report.