Why Today’s Tech Rally Misses Dangers of Ukraine Conflict

It didn’t take long today for U.S. investors to shrug off worries about Russia’s attack on Ukraine. After an initial broad market sell-off, tech stocks rallied strongly this afternoon, lifting the Nasdaq index by 3.3%. That might seem a surprising reaction given the potentially catastrophic effects of a European war on the global economy. Then again, this is the same stock market that two years ago ignored the threat of a global pandemic almost until lockdowns were implemented in the U.S. Don’t read anything into one day’s movements in stock prices.

We’re not going to pretend to have any idea how this conflict will evolve and what the impact will be for U.S. businesses and the tech sector. But there are sure to be some ripple effects. This Bloomberg report smartly pointed out that global supply problems, which have caused havoc for the e-commerce and advertising-related sectors, could get worse. The chip industry, already struggling with shortages, could be further squeezed, Reuters reported. Meanwhile, higher oil prices will feed inflation, which will only heighten the need for higher interest rates. (See our report here on tech firms evacuating workers from Ukraine).