Stocks remained volatile from March 8 to March 14 as investors attempted to predict the economic fallout from the ongoing war between Russia and Ukraine.

On Tuesday, the Biden administration announced a ban on importing energy sources like oil from Russia. Cutting ties with Russia’s massive energy sector will likely heighten oil prices in the United States. However, the administration asserted that such definitive measures are necessary to punish Russia’s economy and persuade it to end its aggression.

In retaliation to the sanctions, the Kremlin announced that Russia would be banning American commodity exports. Considering that Russia is a leading producer of many key commodities in the world, a ban on exports could ripple through global markets and elevate prices for many essential items.

Following these announcements, Brent Crude rose 4% to $128 a barrel while nickel hit an all-time high, rising above $100,000 per ton. Meanwhile, The Dow Jones Industrial Average fell 0.6%, the S&P 500 fell 0.7% and the Nasdaq composite fell 0.3%.

“Not every recession has been caused by an oil price spike, but every oil spike has caused a recession,” Brian O’Reilly, head of market strategy at Mediolanum International Funds Limited, told The Wall Street Journal. “This is likely to be a drawn-out affair and will have a sustained impact on commodity prices.”

While the major indexes broke their four-day losing streak on Wednesday, they once again dropped on Thursday and continued falling into Friday, after reports of escalating tension between Russia and Ukraine as well as unsettling reports of higher inflation.

Inflation in America reached a four-decade high in February, with the consumer price index up 7.9% from the previous year, according to the U.S. Labor Department of Labor. Analysts expect inflation to linger, with ever-increasing energy prices continuing to reduce household disposable income.

Friday concluded with all major indexes finishing lower for the week, with the Dow down 2%, the S&P down 2.9% and the Nasdaq down 3.5%.

Adding to anxieties surrounding supply disruptions and extensive inflation, China announced on Monday that it has shut down numerous key manufacturing regions in an attempt to contain a COVID-19 outbreak.

“It’s almost like we’re in purgatory,” Justin Wiggs, managing director in equity trading at Stifel Financial Corp., told The Wall Street Journal. “You’re trying to invest, and there are a lot of things you can’t model. It’s turned, more or less, into a sentiment game.”

The 10-year Treasury yield rose to 2.139% on Monday, its highest level since June 2019, as
investors demanded higher returns for the every-increasing inflationary risk.

Amazon Inc. announced and confirmed a 20-for-1 stock split and authorized the repurchase of as much as $10 billion of common stock. Following its approval, Amazon shares jumped 5.4% to $2,936.35.

Volatility has been the theme of market behavior for the year so far. Considering the uncertain nature of inflation, supply chain disorders, interest rate hikes and ongoing geopolitical turmoil, markets are largely reflective of investor sentiment rather than intrinsic valuation.

Over the upcoming weeks, investors will likely remain watchful for definitive statements from government officials and will continue to attempt to forecast the increasingly unpredictable economic toll of the war.