Dow futures drop 500 points as tensions between Russia and Ukraine brew

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., February 15, 2022.

Stock futures fell sharply on Monday night as traders continued to monitor the situation between Russia and Ukraine.

The futures tied to the Industrial Average were down by 1.6%. S&P 500 futures were off 2% and the 100 futures were off 2.5%. The US stock market was closed on Monday due to the President's Day holiday.

West Texas Intermediate futures jumped 3.6% to $94.30 per barrel.

Russian President Vladimir Putin said Monday that he would recognize the independence of two regions in Ukraine, which could undermine peace talks with the US. The European Union vowed to take additional measures after it was announced that Biden was going to order sanctions on the regions of Ukraine.

Putin ordered forces into the two regions.

The White House said Sunday that Biden has agreed to meet with Putin in order to de-escalate the Russia-Ukraine situation. The summit between the two leaders would take place after a meeting between the Secretary of State and his Russian counterpart, according to the White House press secretary.

The major averages have posted back-to-back weekly losses due to the Russia-Ukraine conflict. The S&P 500 and the Nasdaq fell last week.

The Federal Reserve is expected to raise rates multiple times next month. There is a 100% chance of a Fed rate hike after the March 15-16 meeting according to the FedWatch tool.

Expectations of tighter monetary policy have put pressure on stocks, particularly those in rate-sensitive sectors like tech, and have sent the Treasury yield higher. The 10-year Treasury yield ended last week at 1.93%. The 10-year was trading at 1.51%.

The market expects the Fed to raise interest rates at nearly every meeting. We left Monetary Policy as Favorable because the Fed is continuing to purchase Treasuries.

Home Depot and eBay are among the companies that will report this week, as Wall Street prepares for the end of the corporate earnings season. More than 400 S&P 500 companies have posted fourth-quarter earnings thus far, and 77.7% have beaten analyst expectations.

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