The headline was:
" Russia fires missile into Poland. 2 dead as missile lands in Poland. "
The subsequent commentary was that NATO article 5 would be invoked.
Article 5 states that the parties to the NATO treaty “agree that an armed attack against one or more of them in Europe or North America shall be considered an attack against them all.”
This would essentially escalate the Ukraine Russia war into a World War.
While bullish for defense stocks, this would certainly spark a fear based sell off, with a commensurate spike higher in the volatility index. While we did get a quick move lower for stocks, and a 8% move higher for the VIX. By the end of the day the 'FEAR INDEX' was basically unchanged. As if the market knew this headline would not escalate the conflict at all.
While we did see the initial knee jerk spike in the VIX, those gains were reversed as the market correctly thought the missiles were not going to escalate the current situation.
We find out this morning that the missiles were indeed not fires from Russia.
" NATO chief and Poland's president say the missiles that killed two people "very likely" caused by the activity of Ukraine's air defense systems "
...almost as if the market knew that before everyone else.
The stock market is always right.