The Russia-Ukraine conflict has contributed to a range of issues not just within their respective countries. Almost immediately after Russia’s invasion, prices for gas increased significantly, which eventually lead to increased prices of most goods and increased inflation worldwide.
Of course, one of the most important things that took a hit following this conflict was US stocks. US stocks have not been seeing an optimistic trend lately, and this week’s Wall Street stocks did nothing to change the trend.
The preceding week proved to be another difficult one, as consistent worries about rising inflation worldwide and worsening relations between Russia and Ukraine. Current reports show that the pace of prices is increasing slowly by August, especially when compared with prior months.
Rising inflation rates equal rising interest rates
While there are many factors that are contributing to the downward trend of the stock market, it is a very significant contributor.
However, what really took analysts by surprise was that the interest rate was rising much faster than they anticipated. With the continuously rising interest rate, prices for basic goods and commodities would also increase. Therefore, to keep up with the rising interest rate, banks will also likely raise their interest rates.
The federal reserve specifically is looking to aggressively increase interest rates to keep up with rising inflation rates, worsening the effect it has on the global economy. In fact, the effects of rising inflation were almost instant, as various stock prices dropped significantly.
Prices for various stocks and how they dropped
The prices for various stocks on Wall Street saw a general decline, leading to more investors losing faith in the market.
The S&P 500 this week finished at slightly over 2,580, which was down by 3.0% for the entire week. As a whole, it was not a very promising look.
The DOW Jones Industrial Average saw its price lose 1.7% and NASDAQ saw its price by drop by 1.5%. However, they were luckier than some companies, as others lost as much as 20%.
Companies facing losses left and right
While some of the major stocks did see a drop in their prices, various other companies felt a larger brunt of the consequences of inflation. Brands like Nike saw their stock nosedive by 12.8%, following an official report where they admitted to seeing lower profits than usual.
One of the reasons that they mentioned why their profits dropped was because of shifting consumer demands following the rise of inflation.
The cruise company Carnival lost as much as 23.3%, after reporting quarterly losses as high as $770 million. Their main reasons for the losses were the hiring operating costs and relevant expenses. They were especially affected by the increase in the price of oil.