As a new trading week kicks off, investors can only watch and wait as tensions continue to rise. With the Russia-Ukraine conflict continuing to weigh on stocks, Wall Street is worried about what will come next. The United States and the United Kingdom have already imposed sanctions on Russia, and Russian stocks have been in a race to the bottom. The ripple effects of the conflict are dragging U.S. stocks down too. Now, investors are left to consider some troubling questions. The biggest question is why are stocks down today?
Why Are Stocks Down Today?
In a nutshell, the escalating Russia-Ukraine conflict is continuing to push stocks down. This was a dominant market trend last week, and it isn’t likely to ease within coming days. However, today’s market decline does warrant a closer examination of the stocks that have fallen and continue to slip.
Today began with several titans of American industry tumbling. As of this writing, both Amazon (NASDAQ:AMZN) and Meta Platforms (NASDAQ:FB) are down more than 1%. Apple (NASDAQ:AAPL) has fallen by almost 1.5% and video game producer Roblox (NYSE:RBLX) by 3%. Worse performance comes from Tesla (NASDAQ:TSLA), which has plunged by more than 4% so far.
Why It Matters
Stocks tumbling amid geopolitical tension is hardly unique. When economic sanctions are threatened against a nation with an important global trade presence, a natural instinct for investors is to sell off stocks with ties to that nation. Indeed, stocks with strong Russia ties such as Caterpillar (NYSE:CAT) and Deere (NYSE:DE) have also been falling.
An analysis of the stocks down today reveals another important lesson for investors — that even the most powerful stocks are not immune to this kind of negative momentum. When a global conflict is dominating headlines, it pushes all stocks down. Tesla has withstood multiple product recalls and many other negative headlines since the year began. The threat of a Ukraine invasion, though, has pushed its stock to new monthly low.
The same goes for other stocks down today. RBLX stock has been touted for its metaverse applications. And in the face of supply chain difficulties, AAPL stock has rallied and impressed even skeptics. Prior to the conflict, it was riding high on anticipation of upcoming product launches.
What It Means
In sum, many investors consider the stocks down today as long-term winners. In better times, they are the names that come up when the topic turns to companies considered too big to fail. They will all rebound, but it will not happen overnight.
What investors should take from today’s events is that the importance of the Russia-Ukraine conflict should not be underestimated. It is pushing stocks down throughout Russia, but all other financial markets are going to feel the pain until these geopolitical tensions are eased. Investors should not be discouraged, but they should be patient.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
