Written by Brenda Nakalema

Stocks keep falling amidst Ukraine- Russia news.

The past couple of days have been rough for stocks. The latest news coming from Eastern Europe has had traders …

The past couple of days have been rough for stocks. The latest news coming from Eastern Europe has had traders very busy. The U.S closed its embassy in Kyiv, and its allies have issued warnings that a Russian invasion of Ukraine could happen within the course of the week.

“The Russian- Ukraine border crisis complicates the near-term market outlook,” said Keith Lerner, Co-chief investment officer at Truist Advisory Services. “That said, history suggests these types of events, which can be devastating from a humanitarian standpoint, tend to have a fleeting market impact unless they lead to a recession. Our work suggests that recession risk in the U.S remains low. Rising geopolitical risks, alongside the coming Fed transition, argue for continued choppier waters in the markets near term.”

A connection between Ukraine and the S&P 500 might be hard to spot, but the unfolding situation could have huge negative second or third-order implications. The index closed Monday down 0.4%; the Dow Jones Industrial Average lost 0.5%, while the Nasdaq composite closed just below the break-even point. There seemed to be hints of a flight-to-safety instinct among investors.

The price of gold gained by 1.5% on Monday to its peak point since last fall. The yield on the 2-year U.S treasury note kicked up to 1.59%- its highest since late June 2019- while a 10-year yield raised to just slightly below 2%.

Due to Russia’s status as a major supplier of natural oil and gas to Europe, and already tight global energy supply is at risk of getting tighter. Oil and gas inventories are low, and production hasn’t resumed to the level it was at before the pandemic, and demand continues to increase as the global economy recovers.

Despite the drop of U.S natural gas prices from their recent highs a week ago, the prices remain at mostly elevated levels. The result of this has been the steady rise of crude oil prices toward the $100 barrel level. On Monday, West Texas intermediate rose by 2.5% to $95.46, Brent, the international oil benchmark, traded for $97 a barrel.

The interruption in fuel supply across the region due to the war in Ukraine will mean even higher oil and gas prices, which will inflict upward pressure on already decades-high inflation in the U.S. There could also be disruptions to other commodity exports to Russia, which might have severe implications for individual companies or industries, such as titanium and Boeing.

According to other analysts, a much longer-term effect that could also have dire consequences on the stock market is the increased shortage of semiconductors- Russia’s successful invasion of Ukraine could embolden China to invade Taiwan, a country that’s a major manufacturer of semiconductors.

“Wall Street will be headline-driven, and it appears risk appetite won’t fully return until Russian troops move away from the border,” wrote a senior market analyst, Edward Moya.

The coming days will remain top of mind in the coming days as investors watch to see and plan their next moves accordingly.