By Caroline Valetkevitch
NEW YORK – Wall Street’s main indexes fell on Tuesday, with the S&P 500 confirming a correction, as the Ukraine-Russia crisis kept investors on edge after Russian President Vladimir Putin recognized two breakaway regions in the country and ordered troops to the area.
The S&P 500 ended down more than 10% from its Jan. 3 closing record high. A correction is confirmed when an index closes 10% or more below its record closing level.
Indexes pared losses and ended off their lows of the session after U.S. President Joe Biden announced the first wave of sanctions against Russia, while saying he was hopeful diplomacy is still available.
Biden added that the United States had no intention of fighting Russia. He said the sanctions, among others things, target Russian banks and sovereign debt.
“It finally gives all of this rhetoric, all of this strategy, some teeth. This is something to make the other side feel some pain and I think that’s appropriate,” said Jake Dollarhide, chief executive officer of Longbow Asset Management in Tulsa, Oklahoma.
Earlier on Tuesday, NATO Secretary-General Jens Stoltenberg said that the alliance believed Russia was still planning a big assault on Ukraine following Moscow’s recognition of two separatist regions in the former Soviet republic’s east.
Britain published a list of sanctions and Germany froze the Nord Stream 2 Baltic Sea gas pipeline project, which would have significantly increased the flow of Russian gas.
All major S&P 500 sector ended lower on the day, led by losses in cyclical sectors including consumer discretionary and energy.
The Dow Jones Industrial Average fell 482.57 points, or 1.42%, to 33,596.61, the S&P 500 lost 44.11 points, or 1.01%, to 4,304.76 and the Nasdaq Composite dropped 166.55 points, or 1.23%, to 13,381.52.
The measures announced by Biden were not as harsh as some investors had feared, said Alan Lancz, president of Alan B. Lancz & Associates Inc, an investment advisory firm based in Toledo, Ohio.
But he said the effect is likely temporary given that the Ukraine-Russia crisis is not over.
The Dow and Nasdaq were each down more than 2% shortly before Biden spoke.
Shares of Home Depot Inc dropped 8.9% after the home improvement chain reported a decline in gross profit margins for the holiday quarter due to a jump in transportation and labor costs.
Declining issues outnumbered advancing ones on the NYSE by a 3.79-to-1 ratio; on Nasdaq, a 2.90-to-1 ratio favored decliners.
The S&P 500 posted 6 new 52-week highs and 34 new lows; the Nasdaq Composite recorded 29 new highs and 560 new lows
(Reporting by Caroline Valetkevitch in New York; Additional reporting by Susan Mathew and Devik Jain in Bengaluru and Sinead Carew in New York; Editing by Maju Samuel and Matthew Lewis)