News

Wall Street slides as Ukraine tensions escalate

Wall Street slides as Ukraine tensions escalate

CONFLICT: Russian President Vladimir Putin, center, and Defense Minister Sergei Shoigu, left, and the commander of the Western Military District Anatoly Sidorov, right, walk upon arrival to watch military exercise near St.Petersburg, Russia, Monday, March 3, 2014. Putin has sought and quickly got the Russian parliament's permission to use the Russian military in Ukraine. Photo: Reuters/Mikhail Klimentyev, Presidential Press Service

By Rodrigo Campos

NEW YORK (Reuters) – U.S. stocks tumbled on Monday alongside other risky assets globally as Ukraine and Russia prepared for possible war after Russian President Vladimir Putin declared he had the right to invade his neighbor.

Ukraine mobilized for war on Sunday and Washington threatened to isolate Russia economically as Moscow’s biggest confrontation with the West since the Cold War unfolded.

The S&P 500 had closed at a record high on Friday, and profit-taking was expected on Wall Street due to the political uncertainty. The index found some support when it fell to 1,840, but broke through it after the first attempt. The S&P 500 extended losses in early afternoon trading and then recovered slightly to hover near the support level.

“There’s been a very significant rally,” said Rick Meckler, president of investment firm LibertyView Capital Management in Jersey City, New Jersey. “If you need an excuse to sell, this is a good one.”

Russian stocks and bonds fell sharply and the central bank raised interest rates to defend the ruble.

The market rout highlighted the damage that the crisis could do to Russia’s vulnerable economy, making it harder to balance the budget and potentially undermining business and public support for Putin.

The Market Vectors Russia ETF fell 8.9 percent in heavy volume, hitting a session low of $22.16, its lowest in 4-1/2 years.

Energy stocks could lose if relations between the United States and Russia deteriorate further. Volatility is likely to spike alongside the uncertainty of the situation.

“Anything that involves a boycott of Russian supplies, which are very significant, could impact the energy sector dramatically,” said Meckler.

“In situations like this, you see very quick reactions reverse as people understand the scenario and how things play out.”

Both Brent and U.S. crude prices rose more than 2 percent each. The S&P energy sector index <.SPNY>, which opened higher, was down 0.6 percent.

The Dow Jones industrial average <.DJI> fell 207.75 points or 1.27 percent, to 16,113.96. The S&P 500 <.SPX> lost 19.45 points or 1.05 percent, to 1,840. The Nasdaq Composite <.IXIC> dropped 58.584 points or 1.36 percent, to 4,249.534.

Gold prices hit a four-month high as investors sought safe-haven assets, boosting gold stocks.

Though the focus will likely remain on Ukraine, the economic calendar was busy on Monday. U.S. factory activity rebounded from an eight-month low in February and consumer spending rose more than expected in January, suggesting the economy was regaining some strength after a recent slowdown.

(Reporting by Rodrigo Campos; Editing by Bernadette Baum, Nick Zieminski and Jan Paschal)

Recent Headlines

in Music

Janet Jackson kicks off world tour

16-overlay2

The "Rhythm Nation" hitmaker took the stage in an all-white ensemble and was joined by a group of young girls — her "JTribe" — to perform classic hits and songs from her upcoming 11th album, "Unbreakable."

in Entertainment

Nicholas Hoult to take on J.D. Salinger in new biopic

nicholashoult

The British actor will portray the beloved American author in "Rebel in the Rye."

in Entertainment

‘Spectre’ could be Daniel Craig’s last ‘Bond’ movie

danielcraig

The British star, whose turn in "Spectre" marks his fourth time playing 007, has now admitted he has no current plans to appear in another Bond movie

in Music

Smokey Robinson gets tribute treatment in Cleveland

smokeyrobinson

Case Western Reserve University and the Rock and Roll Hall of Fame are going to spend a week studying and celebrating Smokey Robinson.

in Viral Videos

WATCH: Truck vs. Tree

17-overlay

Witness the power!