Dow extends longest losing streak since September after Russia chaos as economic worries reverberate

See: Why the ‘easy money’ has been made in the stock-market rally — and what comes next

What drove markets

Financial markets had a relatively muted reaction to the past weekend’s short-lived revolt in Russia, though some analysts said the prospect of further internal strife after the incident could stoke volatility. On Monday, Russian President Vladimir Putin described the Wagner Group’s rebellion as a “criminal activity,” and said its organizers would be “brought to justice.” Meanwhile, U.S. President Joe Biden said his administration is evaluating the situation in Russia.

See: What’s next for markets after aborted Wagner mutiny leaves Russia’s Putin weakened

“So far, the markets appear to be taking a wait-and-see attitude toward the weekend’s eye-opening developments in Russia. But that element of geopolitical uncertainty unfolded just as the stock market suffered its first down week since mid-May as the Fed stuck to its hawkish script on interest rates,” said Chris Larkin, managing director for trading and investing at E-Trade from Morgan Stanley, in emailed comments.

Read: After coup attempt in Russia, how should you invest $100,000 right now?

The mutiny by the mercenary Wagner Group ended abruptly Saturday after its forces had moved to within a few hours of Moscow. Analysts and foreign-policy experts said the incident weakened Putin, raising questions about his grip on power.

While the human toll of the Russia-Ukraine war is staggering, the market reaction is largely a function of how the fighting affects commodity prices, analysts said. Crude futures
CL00,
+0.12%
settled only modestly higher on Monday, while gold and silver prices also ended up.

“For the most part, the market reaction was that there wasn’t anything new there that changed people’s thoughts about Putin’s credibility for very long,” said Tom di Galoma, managing director and co-head of global rates trading at BTIG in New York. “The markets sloughed it off pretty quickly.”

Worries about the global economy continued after a sharp drop in the German Ifo business-climate index for June. The closely watched gauge declined to 88.5 in June from 91.5 in May, according to data from the Ifo Institute published Monday. The reading fell below economists’ expectations in a poll by The Wall Street Journal.

A flurry of rate hikes by European central banks last week heightened worries about growth. Meanwhile, Federal Reserve Chair Jerome Powell reiterated that a strong majority of policy makers were in favor of two more quarter-point rate increases, after the central bank opted to leave its fed-funds rate unchanged earlier this month.

“With Fed chief Powell reminding everyone the inflation fight is a long way from being over — and that the Fed could raise rates another 0.5% before they call it quits — every inflation data point will be closely scrutinized,” said E-Trade’s Larkin.

That includes Friday’s personal-consumption expenditures index, the Fed’s preferred inflation measure, and the June jobs report next week, he said, which “could determine whether last week’s pullback remains just that or turns into something bigger.”

Companies in focus

• Tesla Inc.
  TSLA,
  -6.06%
  shares finished down by 6.1% after Goldman Sachs became the latest Wall Street bank to downgrade the automaker.

• Shares of Lucid Group Inc.
  LCID,
  +1.46%
  ended 1.5% higher, bouncing off a record-low close, after the electric-vehicle and battery-pack maker disclosed a supply agreement with U.K.-based luxury automaker Aston Martin Lagonda Global Holdings PLC
  ARGGY,
  +11.08%

  AML,
  +10.76%.

• Virgin Galactic Holdings Inc.
  SPCE,
  -4.61%
  shares finished down by 4.6%, failing to hold premarket gains seen after the private spaceflight company announced June 29 as the target date for its first commercial flight.

— Steve Goldstein contributed.