New York: As headlines about an apparent escalation of the conflict in eastern Ukraine hit traders' screens, selling was the word on Wall Street. Once again, though, for many it looked like nothing but another buying opportunity in US stocks.
Benchmark US Treasury yields hit their lowest in 14 months on Friday after Ukraine said its forces had attacked and partly destroyed a Russian armoured column that entered Ukrainian territory overnight.
The S&P 500 ended on Friday down a mere fraction of a point. The three major US stock indexes posted a second straight week of gains after a correction that evaporated following a brief drop of 4 per cent.
An escalation of the conflict in eastern Ukraine will likely bring stronger economic sanctions against Russia from Europe and the United States — and harsher retaliation from Moscow.
Business sentiment is already on edge in Germany as Europe's largest economy deals with reduced trade with Russia. An index of Russian equities has dropped 6 per cent for the year so far. Against that backdrop, US stocks — backed by earnings — still look like the best option for investors in developed markets.
US-based stock funds that invest in European equities have marked nine straight weeks of outflows, according to Lipper, a Thomson Reuters company. Flows into US stock funds in that time have come to about $3 billion.
"If you're concerned about increased tension in Ukraine, that's the trade — at least for now," said Art Hogan, chief market strategist at Wunderlich Securities in New York.
"We are the cleanest shirt in the hamper," he said of the US stock market.
During the selloff on Friday, the utilities sector remained strong, rivaled only by energy stocks, with investors focusing on high-dividend payers as US Treasury bond yields fell.