What Will Stocks Do if War—or Peace—Erupts in Ukraine?

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A Ukrainian guard at a checkpoint on the border with Russia. There could be a financial toll, as well as a heavy human one, if the Kremlin launches an invasion.

Vyacheslav Madiyevskyy/Ukrinform/Future Publishing via Getty Images

It’s hard to imagine two men more dissimilar than Russian dictator Vladimir Putin and Fed chief Jerome Powell. But, as the U.S. headed into its three-day holiday weekend, the unlikely duo shared one important trait: the power to immediately affect U.S. markets—Putin with a potential war in Ukraine; Powell, with higher interest rates.

Peter Tchir, head of macro strategy at Academy Securities, undoubtedly was channeling in a client note on Friday what millions of traders, investors, and, it might be added, financial journalists were thinking, as the prospect of stopping a Russian invasion of Ukraine appeared to wane, despite the Biden administration’s diplomatic efforts to avert a war.

If the long-predicted invasion does take place, how much will the markets decline? Or have they priced in too much downside risk? And if nothing happens over the holiday weekend, where do stocks open on Tuesday? Those were all questions much on the minds of market participants and observers at week’s end, as Tchir writes.

Other market watchers invoked the famous quote attributed to financier Nathan Mayer Rothschild during the Napoleonic Wars: “Buy at the sound of cannons.” To some, that sounded like an erudite excuse to buy the dip (usually with a rude modifier added in more jejune versions of this rally call).

With the stock market facing the twin headwinds of possible military action and likely Federal Reserve policy tightening, the major…


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