S&P 500 falls in mixed US trade as investors digested new Western sanctions against Russia

• US equities were mixed on Monday as investors digested new Western sanctions against Russia as war in Ukraine raged on.
• The S&P 500 closed 0.25% lower in the 4370s, having swung within a 60 point 4320-4380ish range on the day.
• On a busy week for US data and Fed speak, geopolitics is likely to remain the main market driver. 

US equities were mixed on Monday in tandem with their global peers as investors digested the latest barrage of Western sanctions against Russia as its invasion of Ukraine entered the fifth day. The S&P 500 closed 0.25% lower in the 4370s, having swung within a 60 point 4320-4380ish range on the day. The tech-heavy Nasdaq 100 index rose 0.3%, to the 14,200s, helped out by lower US yields. The Dow was down 0.5% to slip back below the 34,000 mark. The S&P 500 CBOE Volatility Index, though well off intra-day highs near 34.0, rose more than two points to around 30.0.

Some Russian banks will be kicked from SWIFT, the CBR saw most of its assets frozen, all Russian planes were banned from EU airspace and NATO nations announced intentions to drastically increase military aid to Ukraine. Energy prices subsequently spiked, exacerbating fears of persistent inflation and even stagflation in Europe. While those fears are not so acute in the US, data and Fed rhetoric this week is expected to underline the fact that the US economy remains inexorable on course for higher interest rates this year and next. Market commentators have cited this the main reason for this year’s pullback in stocks.

Tuesday sees the release of the January ISM Manufacturing PMI survey, Wednesday sees the first day of Fed Chair Jerome Powell’s semi-annual testimony before Congress, while Thursday sees his second day and the release of ISM Services PMI. On Friday, the Bureau of Labour Statistics will release the February labour market report. So it’s a busy week, but data will nonetheless play second fiddle to geopolitics; any signs that a ceasefire between Russia/Ukraine could see risk appetite return with strength.