Dow Falls on Ukraine Uncertainty

Wall Street was awash with uncertainty yesterday as investors stayed jittery over the potential conflict between Russia and Ukraine.

US stocks fell after news emerged that the US would close its embassy in Kyiv. The Dow slid by 172 points, or 0.5%, on Monday. The broader S&P 500 fell 0.4%, while the NASDAQ was stable.

The East European conflict might be top of mind for many investors, but it is not the only thing causing uncertainty. Investors are also worried about the Fed raising interest rates higher and faster than expected, and doubts continue to swirl around whether global inflation can be tamed. To top it all, US oil prices jumped to $95 a barrel on Monday for the first time since 2014. This unwelcome rise will keep consumer prices high, which feeds directly into soaring inflation numbers.

What does this mean for me? 

In addition to the humanitarian cost, investors fear a war between Russia and Ukraine could derail the global economy. 

Russia is one of the world’s foremost energy exporters, and a protracted conflict could throttle the supply of natural gas and oil, causing more energy price bubbles.

The interconnectedness of all these factors has investors on edge. If you are new to investing, you could rightly wonder how much of an effect on the global economy a conflict in a faraway region can have. In the case of Russia and Ukraine, the stakes are high for everyone. Be on the lookout for compensatory movements in energy prices, consumer prices and inflation.