S&P 500 enters "correction" territory amid Ukraine unrest

Stocks dropped on Thursday, as tensions escalated in Ukraine over Russia's decision to send forces into that nation's eastern regions and as the U.S. and its western allies move to retaliate with sanctions. 

The S&P 500 fell 44 points, or 1%, to 4,304.83, pushing the benchmark index into correction territory, or more than 10% below its all-time high set in January. The Dow lost 595 points, or 1.4%, to close at 33,594. The tech-heavy Nasdaq composite was down 1.2%.

President Biden on Tuesday afternoon announced new sanctions against Russia as a result of what he called a "Russian invasion of Ukraine," a response to Russia President Vladimir Putin's move to send forces into Ukraine's eastern breakaway regions. Mr. Biden said the sanctions, closely coordinated with allies and partners, will target two large banks in Russia and its sovereign debt. 

"That means we cut off Russia's government from western financing," the president said. 

Major market indexes are in a three-day slide as investors closely watch the crisis in Ukraine. The White House is referring to Russian troop deployments in eastern Ukraine as an "invasion" after initially hesitating to use the term. That's a red line that President Joe Biden said would result in the U.S. levying severe sanctions against Moscow.

Russia's recognition of the independence of several regions in eastern Ukraine and decision to send in forces has raised fears that a full-scale invasion is near.

The crisis in Ukraine has made for volatile energy prices over the last few weeks. U.S. crude oil prices were up 1.4% on Tuesday. Russia is a major energy producer and the tensions over Ukraine have brought wide swings in volatile energy prices, on top of the inevitable risks of a broader conflict.

Oil prices already had surged recently to their highest level since 2014. By early Tuesday, the advance of U.S. benchmark crude oil had abated slightly. It was up about $3, or 3.5%, to about $94 per barrel in electronic trading on the New York Mercantile Exchange. The price of Brent crude, the standard for international oils, gained about $4.50, or nearly 5%, to hit about $98 per barrel.

U.S. trading was closed Monday for Presidents Day, but markets in Europe and Asia shuddered as Putin moved to secure Russia's hold on Ukraine's rebel regions, adding to fears of a full-scale invasion.

Those actions have undermined hopes for averting a conflict that could cause massive casualties, energy shortages on the continent and economic chaos around the globe.

The U.S. and European Union condemned Russia and prepared to hit back with sanctions. On Tuesday, Germany suspended the approval process for the Nord Stream 2 pipeline that would bring Russian natural gas to Europe. Western powers have feared Russia might use skirmishes in Ukraine's eastern regions as a pretext for an attack on the democracy, which has defied Moscow's attempts to pull it back into its orbit.

European markets, which have been particularly sensitive to developments in the Russia-Ukraine crisis, were mostly lower.

Retailers and other companies that rely on direct consumer spending fell broadly. Home Depot slumped 9.9% as concerns over the home-improvement retailer's profit margins outweighed an otherwise solid quarterly financial report.

Technology stocks, which have an outsized impact on market indexes because of their pricey valuations, also fell. Apple shed 2.3%.

Bond yields were mixed. The yield on the 10-year Treasury held steady at 1.92%, where it was late Friday. Stock and bond markets were closed on Monday for the Presidents Day holiday.

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.

Investors also focused on the latest round of corporate report cards, especially from department stores. Shares in Macy's and Dillard's initially rose after reporting solid quarterly results, but shed their gains by midafternoon. Macy's fell 3.7% and Dillard's slid 5.8%.

Mattress maker Tempur Sealy International fell 20.2% after reporting disappointing financial results.

Deal-making also helped lift several stocks. Television station owner Tegna rose 6.1% following a report that it's being bought by Standard General. Book publisher Houghton Mifflin Harcourt rose 15% on news it's being bought by Veritas Capital.