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Russia's invasion of Ukraine has roiled financial markets around the world


Russia's invasion of Ukraine has roiled financial markets around the world and sent energy prices soaring. The U.S. stock market opened sharply lower this morning. Crude oil prices topped $100 a barrel. NPR's economics correspondent, Scott Horsley, joins us now. Good morning, Scott.

SCOTT HORSLEY, BYLINE: Good morning, Rachel.

MARTIN: How bad is the sell-off on Wall Street?

HORSLEY: All the major indexes are down. The Dow tumbled around 800 points in the first few minutes of trading. And of course, that just adds to the losses of recent days that came in anticipation of this move by Russia. Both the Dow and the S&P 500 index are now in correction territory, meaning they're down more than 10% from their recent highs. And as of this morning, the tech-heavy Nasdaq index has slipped into bear market territory, meaning it's down 20% from its recent high. Overseas markets were also sharply lower overnight. Asian stocks fell in the 2% to 3% range, and Russia's own markets were rattled. The Russian currency dropped about 5% against the dollar.

MARTIN: Where are we going to see the toughest hit on the economy because of this?

HORSLEY: Well, the first place to look is in those energy markets. Of course, Russia is a major exporter of both oil and natural gas, and the possibilities that supplies could be disrupted has sent prices sharply higher. Natural gas prices in Europe, which relies heavily on natural gas from Russia for both heating and electricity, were up a lot. Crude oil prices, as you mentioned, topped $105 a barrel at the global markets. They were close to $100 a barrel here in the U.S. All of that's going to translate into higher prices at the gas pump, where consumers in this country were already paying an average of $3.54 a gallon. We've also seen a jump in grain prices. Both Russia and Ukraine are both wheat producers, so corn and wheat prices have been going up. That could affect prices at the grocery store. And of course, Rachel, food and fuel prices were already pushing inflation to its highest level in four decades.

MARTIN: Right. So the U.S. was already, you know, climbing out of the pandemic recession into this fragile recovery. Is that now going to stall?

HORSLEY: It probably won't stall the recovery, but this may slow it down a bit. We did get news from the Commerce Department this morning that the economy grew even faster at the end of last year than initially reported. So the U.S. came into 2022 with a lot of economic momentum. This conflict in Ukraine, it - probably not going to derail that recovery, but it's another wrinkle. If it both slows growth and raises inflation, it complicates things for the Federal Reserve. Listening to Fed officials over the last few days, though, it doesn't sound as this is going to change the central bank's plan to start raising interest rates next month in an effort to get control over prices. And we should add, while rising gasoline prices are certainly a hardship for drivers in the U.S, they are a potential windfall for U.S. energy producers. We're already seeing an uptick in investment in the oil patch, and, remember, the U.S. is the No. 1 producer of both oil and natural gas.

MARTIN: Scott, what about the sanctions that the U.S. and NATO allies are imposing on Russia? Are those going to carry a big price tag for the U.S. economy?

HORSLEY: Not a big price tag. If, as threatened, the U.S. limits exports of certain high-tech goods to Russia, that could have some consequences but not huge consequences. Russia's a pretty small economy, and it's certainly not a big trading partner for the U.S. It's a bigger trading partner for Europe. One thing to be wary of, though, we've already seen Russia using cyberweapons against Ukraine. And if it were to train those cyberweapons on the U.S. in retaliation for sanctions, that could have some economic effects here. So cybersecurity is more important than ever.

MARTIN: NPR chief economics correspondent Scott Horsley with the economic impact of Russia's invasion into Ukraine. Scott, thank you. We appreciate it.

HORSLEY: You're welcome.

(SOUNDBITE OF SOHO'S "FLO-FI") Transcript provided by NPR, Copyright NPR.

Rachel Martin is a host of Morning Edition, as well as NPR's morning news podcast Up First.
Scott Horsley is NPR's Chief Economics Correspondent. He reports on ups and downs in the national economy as well as fault lines between booming and busting communities.