All fall down after Russia uses Putin option

On Wall Street, the S&P 500 fell 1.1% to continue its dismal start of the year, though it moderated its drop after starting the day down 2.6%. The heaviest losses hit stocks in Europe, after officials called Russia’s nearby moves a “brutal act of war,” with the German DAX down 4%. MSCI’s gauge of stocks across the globe was last down 2.1% after touching its lowest level since March 2021. Europe’s stock markets tumbled with the STOXX 600 index falling more than 4%, to its lowest since May 2021. It finished down more than 3%.

Ukraine meanwhile was forced to suspend trading in its currency as its bonds crashed violently as investors bet that it could now default again, as it did after Russia’s 2014 annexation of Crimea.

Stocks in the US pared their early losses on Thursday as investors debated whether Russia’s aggression could make the Fed less aggressive about raising rates. In the past, it has sometimes delayed big policy decisions amid uncertainty about the Kosovo war and the US invasion of Iraq, for example, according to Goldman Sachs.

Regardless, bond yields sank in the meantime around the world, a sign that investors were moving into things that may offer safer returns than stocks. The yield on the 10-year US Treasury fell to 1.92% from 1.97% late Wednesday. Gold also rallied and rose 0.8%, continuing its strong run on worries about Russia and Ukraine.

On Wall Street, worries about higher interest rates have delivered the heaviest hits on big technology stocks, a turnaround after those companies soared to lead Wall Street out of its coronavirus-caused plummet in 2020.

The Nasdaq Composite, which is full of big tech stocks, was down as much as 3.4% Thursday, before it rallied back to positive territory. During the morning, it was threatening to close more than 20% below its record set in November, which would have been the first such tumble since 2020. The S&P 500 is now down 12.9% from its record set early this year.

The Dow Jones Industrial Average was down 455.82 points, or 1.38%, to 32,675, as of 1:47 p.m. Eastern time.

Washington, Britain, Japan and the EU earlier imposed sanctions on Russian banks, officials and business leaders. Additional options include barring Russia from the global system for bank transactions.

That helped bank stocks fall to some of the market’s sharpest losses. Financial stocks in the S&P 500 slumped 3.7% for the largest loss among the 11 sectors that make up the index, with JPMorgan Chase down 5.1% and Bank of America down 5.2%. Deutsche Bank slumped 12.5% in Germany.