U.S. Stocks Extend Sell-Off Amid Intensifying Russia-Ukraine Crisis

Reflecting worries about escalating tensions between Russia and Ukraine, stocks moved sharply lower during trading on Tuesday. The major averages extended the steep drop seen to close out the previous week, with the Dow tumbling to an eight-month closing low.

The major averages fluctuated in the latter part of the session but closed firmly in negative territory. The Dow plunged 482.57 points or 1.4 percent to 33,596.61, the Nasdaq slumped 166.55 points or 1.2 percent to 13,381.52 and the S&P 500 slid 44.11 points or 1 percent to 4,304.76.

The continued weakness on Wall Street came amid intensifying worries about a Russian invasion of Ukraine a day after the Russian government recognized two Ukrainian separatist regions – Donetsk and Luhansk – as sovereign states.

Russian President Vladimir Putin subsequently ordered troops into the territory as “peacekeepers,” with Russia’s upper house of parliament later giving consent to sending forces abroad.

Describing the latest actions by Russia as the beginning of an “invasion” of Ukraine, U.S. President Joe Biden announced the “first tranche” of U.S. sanctions.

“I’m going to begin to impose sanctions in response, far beyond the steps we and our allies and partners implemented in 2014,” Biden said from the White House. “And if Russia goes further with this invasion, we stand prepared to go further as with sanctions.”

Biden said the U.S. will impose sanctions on two large Russian financial institutions, VEB and Russia’s military bank, and Russia’s sovereign debt as well as Russian elites and their family members.

The president also announced the U.S. has worked with Germany to ensure the Nord Stream 2 gas pipeline will not move forward, with Germany previously halting certification of the pipeline.

The U.K. also announced a “first tranche” of sanctions on Russia, targeting five Russian banks and three “very high net worth” individuals.

Biden also revealed that he has authorized additional movements of U.S. forces and equipment already stationed in Europe to strengthen Baltic allies but argued the moves are “totally defensive.”

Sector News

Tobacco stocks moved sharply lower over the course of the trading day, dragging the NYSE Arca Tobacco Index down by 3.6 percent.

Substantial weakness also emerged among retail stocks, as reflected by the 2.9 percent nosedive by the Dow Jones U.S. Retail Index.

Home improvement retailer Home Depot (HD) helped lead lower despite reporting fourth quarter results that beat analyst estimates and boosting its dividend by 15 percent.

Housing stocks also saw significant weakness on the day, with the Philadelphia Housing Sector Index tumbling by 2.9 percent to its lowest closing level in almost a year.

Computer hardware, airline and natural gas stocks also came under considerable selling pressure, moving lower along with most of the other major sectors.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved sharply lower during trading on Tuesday. Japan’s Nikkei 225 Index tumbled by 1.7 percent, while Hong Kong’s Hang Seng Index plummeted by 2.7 percent.

Meanwhile, the major European markets turned in a mixed performance on the day. While the U.K.’s FTSE 100 Index inched up by 0.1 percent, the French CAC 40 Index closed just below the unchanged line and the German DAX Index fell by 0.3 percent.

In the bond market, treasuries saw considerable volatility during the session before closing modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 1.948 percent.

Looking Ahead

Developments in Ukraine are likely to continue to impact trading on Wednesday amid a lack of major U.S. economic data.

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