Damian J. Troise and Alex Veiga
NEW YORK — Stocks closed broadly lower Tuesday after Russia sent forces into Ukraine’s eastern region and the U.S., European Union and U.K. responded with economic sanctions.
The rising geopolitical tensions kept financial markets on edge, pulling the S&P 500 into a correction — Wall Street speak for a drop of at least 10% from its recent peak — for the first time in more than three years.
The benchmark index fell 44.11 points, or 1%, to 4,304.76. That puts it 10.3% below the all-time high it set on Jan. 3. The last correction for the index was in December 2018. The Dow Jones Industrial Average and Nasdaq composite also lost more than 1%.
“We’re overdue, and right now the market has been knocked for a loop from the one-two punch of higher interest rates plus geopolitical tensions,” said Sam Stovall, chief investment strategist at CFRA.
The latest losses come as investors closely watched the crisis in Ukraine a day after Russia recognized the independence of several regions in Eastern Ukraine and decided to send in forces.
On Tuesday afternoon, President Joe Biden announced the U.S. was ordering heavy financial sanctions against Russian banks and oligarchs, declaring that Moscow has flagrantly violated international law by invading Ukraine. Biden also said the U.S. was moving additional troops to the Baltic states on NATO’s eastern flank.
Russia sanctioned over Ukraine moves
Earlier in the day, the 27 European Union members unanimously agreed to levy their own initial set of sanctions targeting Russian officials over their actions in Ukraine.
U.S. crude oil prices jumped 1.4% after earlier rising more than 3% as energy markets remained volatile. European natural gas prices jumped after Germany withdrew a key document needed for certification of the Nord Stream 2 gas pipeline from Russia.
Fed uncertainty
The crisis in Ukraine is yet another concern for investors who have begun 2022 trying to determine how the economy will fare amid rising inflation and looming interest rate hikes.
Companies face supply chain problems and higher raw materials costs as demand for goods outpaces supply. The Federal Reserve plans on raising interest rates to combat inflation, but Wall Street is uncertain about how the number of rate hikes and their frequency will impact the broader market and economy.
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