Since the beginning of the year, the equity markets have experienced dizzying volatility due to rising inflation, hostilities between Ukraine and Russia, and forthcoming interest rate hikes. The Dow Jones Industrial Average is down 7% year-to-date, while the S&P 500 and Nasdaq Composite have fallen 8.4% and 13.4%, respectively, year-to-date.
The markets could remain volatile in the near term because Russia shows no signs of de-escalation in its invasion of Ukraine. Also, investors have been spooked by rising crude oil prices and a worsening supply crunch. Prices of crude oil have been climbing, with the benchmark Brent and WTI hitting multi-year price highs. Investors fear that global trade might be impacted as the West moves to block some Russian banks from the SWIFT international payments system. More sanctions on Russia could lead to further price swings as investors assess their implications for the global economy.
