S&P 500 Recovers From Fresh Monthly Lows To 4,350 Zone As Investors Wait For New US Sanctions On Russia

• The S&P 500 has recovered to trade sideways near 4,350 after hitting fresh monthly lows of 4,310.
• Equity markets continue to be heavily driven by geopolitical headlines, with US sanctions on Russia expected to be announced soon.
• The index is trading just under 10% below January’s all-time highs, meaning it is not on track to confirm a “correction”.

It was a hectic start to the session, with the S&P 500 index falling as much as 0.7% immediately after the open to hit fresh monthly lows just above 4,310, though it has since recovered to trade sideways at the 4,350 area. At current levels, the index is trading just under 10% below the all-time highs it posted earlier in the year; a close of more than 10% below a recent high would confirm that US equities have undergone a “correction”.

Investors remain nervous ahead of the official announcement of US sanctions against Russia at some point in the day. The United States and its NATO allies are hitting Russia with fresh sanctions after it recognized the independence of two breakaway regions in eastern Ukraine and moved troops into the area on a “peacekeeping” mission. Market commentators have noted how markets will continue to be largely driven by Russia/Ukraine headlines, leading to difficult and unpredictable trading conditions. Investors are concerned that the recent escalation by the Russians raises the risk of a broader conflict between Russia and Ukraine, raising the risk that the West will impose further sanctions on Russia that could have an inflationary impact on the global economy.

In the background, traders are also eyeing a Fed tightening, after Fed policy chief Michelle Bowman said on Monday that she had not yet decided whether the Fed should raise interest rates by 25 or 50 percent. bp in March. The latest round of US data releases, in which S&P/Case-Shiller house price inflation beat year-on-year expectations in December, a stronger-than-expected rebound in the services and manufacturing sectors based on preliminary February Markit PMI surveys and slightly better than the forecast advance February consumer confidence numbers have not affected US stock market sentiment. That speaks to the fact that US data The US has been and probably will continue to play second fiddle to geopolitical issues. Traders may pay more attention to Friday’s January core PCE inflation report if it affects the Fed’s tightening expectations in any way.

As for the other major US indices, the Nasdaq 100 Index rallied north of the 14,000 level after briefly dipping below 13,900 and is now trading 0.3% higher on the day. The bears will be watching for a test of yearly lows in the 13,700 area should the index lose control of the 14,000 level once again. Meanwhile, the Dow Jones has lost its grip at the 34,000 level and is trading around 0.4% lower on the day. The S&P 500 CBOE Volatility Index, or VIX, has dipped back below 29.00 after briefly testing February highs in the 32.00 area earlier in the session.