S&P 500 on course to confirm a S&P correction

S&P 500 on course to confirm a S&P correction

REUTERS Brendan McDermid

The prospect of a Russian attack on Ukraine posed a double whammy for investors worried about the tightening of the Federal Reserve's policy on Ukraine, as the S&P 500 fell on Monday, with the S&P 500 on course to confirm a correction.

A correction is made when an index closes 10% or more than its record closing level. The S&P 500 index SPX is now down 10.9% from its January 3 closing high.

In early trading, nine of the 11 major S&P sectors fell more than 2% each, with nine of them falling more than 2%.

The economically sensitive Russell 2000 index RUT slid 2.8%. The index dropped as much as 20.3% from its Nov. 8 peak, putting it on course to confirm a bear market.

The U.S. State Department ordered diplomats' family members to leave Ukraine on Sunday, as U.S. President Joe Biden weighed options for boosting America's military assets in Eastern Europe to counter a buildup of Russian troops.

The order was one of the clear signs that American officials are bracing for an aggressive Russian move in the region. A widely watched gauge of investor anxiety in U.S. markets - the CBOE Volatility Index VIX - was last trading at its highest level since January 2021.

Ukraine is a concern that's weighing on the markets today, said Darren Schuringa, chief executive officer of ASYMmetric ETFs in New York. This will continue to weigh on the markets until there is a resolution and clarity as to what the outcome looks like. The market will pay close attention to how worried the Fed is about inflation and how aggressive the U.S. central bank will try to contain it after the Fed's policy meeting ends on Wednesday. The Fed funds futures traders are fully pricing in a 25 basis point hike in March, in addition to three more rate increases by the end of the year.

The rally in Treasury yields has dealt a big blow to Wall Street's growth names, as the Nasdaq index IXIC is down 16% from its November closing peak due to the fact that the stock market is off to a rough start in 2022.

The Dow Jones Industrial Average DJI went down 744.95 points, or 2.17%, at 33,520. 42, the S&P 500 SPX was down 120.17 points, or 2.73%, at 4,277. The Nasdaq Composite IXIC was down 439.17 points, or 3.19%, at 13,329. Tesla Inc TSLA.O slid 7.7% to lead a decline in technology stocks.

If you don't deliver the earnings to justify the valuation, there's room for more corrections, said Schuringa, a tech company's multiples and valuations are certainly high in a lot of instances.

Kohl's Corp. KSS.N surged 31.6% after Reuters reported private equity firm Sycamore Partners is preparing to make a bid for the U.S department store days after a consortium backed by activist investment firm Starboard Value proposed a buyout. Declining issues outnumbered advancers for a 12.49 to 1 ratio on the NYSE and a 7.33 to 1 ratio on the Nasdaq.

The S&P index recorded a new 52 week high and 27 new lows, while the Nasdaq recorded two new highs and 1,146 new lows.