S&P 500 chops around level 4300 as Biden announces new Russia sanctions, Ukraine calls up reservists

• USD equities have recovered from intra-day session lows after Biden’s Russia sanction announcement in something of a relief rally.
• Ukraine President Zelensky issued a decree to recruit reservists.
• The S&P 500 chopped around the 4300 level, ending the day down more than 1.0%.  

US equities recovered from intra-day lows on Tuesday in wake of US President Joe Biden’s announcement of new sanctions targeting Russian banks, sovereign debt and wealthy individuals, joining the UK and EU who had already announced similar measures. In the aftermath of Biden’s remarks, where he urged that the door for diplomacy remains open, US equities staged a rebound, perhaps on hope that a diplomatic resolution could yet avoid further escalation and sanctions. But the news that the Ukrainian President had issued a decree to recruit more reservists led to fresh choppiness just prior to the close.

Some analysts warned not to read too much into the price action with US equities trading at monthly lows, saying the rebound could have been nothing more than a “buy the fact” reaction after the sanctions unveiled by Biden were largely in line with expectations. Others said the recovery might have been driven by dip-buying, with some traders cautioning that US equity markets have been overly sensitive to developments in Eastern Europe and should instead focus more on domestic fundamentals.

Either way, the S&P 500 index chopped either side of the 4300 level on Tuesday, ending the session more than 1.0% lower. Bears continue to eye a potential test of the January lows in the low 4200s and a close at current levels would confirm that the index has fallen back into “correction” territory (i.e. more than 10% below recent record highs).

Meanwhile, the Nasdaq 100 index also recovered from intra-day lows, but was unable to regain the 14K level and also dropped more than 1.0%, while the Dow tanked roughly 1.5% to test 33.5K and eye a test of January lows in 33.1K area. The S&P 500 CBOE Volatility Index or VIX remained under 30.00 after testing February highs at 32.00 earlier in the session.