Stock futures rise as investors eye Russian-Ukrainian war, Fed’s next move

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, March 11, 2022.

Brendan McDermid | Reuters

Stock futures rose in overnight trading on Sunday ahead of a big week as the Russia-Ukraine war continues to escalate and the Federal Reserve may raise rates for the first time since 2018.

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

Fighting has intensified around the Ukrainian capital, Kyiv, as Russian forces bombard towns across the country, killing civilians unable to escape. The financial fallout from harsh Russian sanctions will be on display in the coming days ahead of the scheduled sovereign bond payment.

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

“At this time, the Fed should be cautious on interest rate policy in 2022, given the conflict in Ukraine,” said Lindsey Bell, head of markets and currency strategist at Ally. “The dispute adds complexity to the Fed’s already difficult job. The central bank is likely to remain dependent on data as it makes rate decisions throughout the year.”

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

Major averages all dipped into corrective territory as geopolitical risks and inflation fears sent asset prices tumbling. The blue-chip Dow Jones is down nearly 11% from its all-time high, while the S&P 500 is down nearly 13% from its all-time high. The tech-heavy Nasdaq took the brunt of the selloff, falling more than 20% from its record high in November.

“The short-term risk/reward is positive if, for no reason other than the band, there was pretty much all the negative news thrown at it and it still couldn’t sustain a material break below the level 4200,” said Adam Crisafulli, founder of Vital Knowledge.

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