US markets recover after Ukraine invasion sends them reeling

On Wall Street, the S&P 500 tumbled 2.6% at the open of trading before erasing the drop and flipping to a gain of 0.6%. The heaviest losses hit stocks in Europe, after officials called Russia’s nearby moves a “brutal act of war,” with the German DAX down 4%.conflict looked set to send prices even higher at gasoline pumps and grocery stores

But they gave back much of their gains after Biden said the sanctions package is “specifically designed to allow energy payments to continue.” While he described the sanctions as severe, Ukrainian officials urged the U.S. and West to go further and cut the Russians from a crucial financial payments system.

Increases in energy and food prices could amplify worries about inflation, which in January hit its hottest level in the United States in a couple generations, and what the Federal Reserve will do in turn to rein it in. In the past, the Fed has sometimes delayed big policy decisions amid uncertainty about the Kosovo war and the U.S. invasion of Iraq, for example, according to Goldman Sachs. But economists at the bank say they still expect the Fed to raise rates steadily at its upcoming meetings. The Ukraine tensions probably just make it less likely the Fed will start the process with a bigger-than-usual increase in rates, something some Fed officials recently suggested.

Many investors also said that past global events, such as an invasion, have had only short-term effects on markets that last a few weeks or months.

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