US-Russia Sanctions Impact on the US Stock Market

In 2014, Russia – United States relations became significantly strained due to the Ukrainian crisis and following annexation of Crimea. This paper empirically examines the performance of US stock returns during this period and especially right after the political decisions are announced. The main objective of our research is to determine the relationship between sanctions announcements and stock market returns. To achieve this purpose, we employ the content analysis of news on US-Russia relations between March 2014 and April 2018 based on Factiva database in order to identify the importance of news announcements. To assess the market behavior, the event study method is used. After the sampling process where we selected 9 companies, the qualitative analysis of their stock returns fluctuation was conducted. Moreover, to examine the hypothesis of stock market response in general, we employed the event-study method using S&P500 market index as an object. Our findings confirm the predicted relationship and report that some companies show more substantial changes in market movements as well as the US stock market in general. These results might contribute to empirical literature on existing research and allow investors to make more rational decisions.