HOUSTON — Russia’s invasion of Ukraine is impacting oil and wheat prices.
The Dow dropped 830 points Thursday morning over concerns of a prolonged conflict. By the time the closing bell rang, it was up by 92 points.
“We haven’t seen something on this scale in quite a while in Europe,” said Jorge Barro, Fellow in Public Finance with Rice University’s Baker Institute.
Barro says this invasion is unique because it was not a surprise. He believes that gave the market time to adjust and helped keep stock prices from falling more.
Barro believes a few factors will impact how much farther the market drop, especially the conflict’s impact on supply chains for oil, grains, and semiconductor components from Russia and Ukraine.
Historically, the stock market has recovered and kept rising, even after drops from the September 11 attacks in 2001, the recession in 2008, and the start of the pandemic in 2020.
“There’s reason to believe that, based on historical events, that this one might be another one of those instances where the stock market would bounce back,” said Barro. “I think it depends on a lot of factors like the long-term outlook on interest rates.”
The million-dollar question: what should people with investments do? Barro’s advice is to decide how much risk you can stomach and research alternatives.
“If you’re in a different situation where you’re coming up on retirement and you could either buy a house on the beach or live comfortably off of Social Security for the rest of your life, then maybe it’s okay to continue investing in higher-risk assets like the stock market,” he said.
The price of cryptocurrencies have also dropped due to the situation in Ukraine, while gold prices have gone up.
Because everyone’s life situation is different, Barro recommends talking to a financial advisor.