© Reuters.
By Yasin Ebrahim
Investing.com – The S&P 500 stumbled Tuesday, as hopes for a diplomatic resolution to deescalate tensions on the Ukraine border soon turned to despair as the U.S. outlined fresh sanctions to deter Russia from carving out further territory in Ukraine.
The S&P 500 fell 1%, the Dow Jones Industrial Average fell 1.4%, or 482 points, the Nasdaq slumped 1%.
"We're implementing full blocking sanctions to large Russian financial institutions, VEB, and their military bank," President Joe Biden said. These sanctions would cut off Russia's government from Western financing.
Russian President Vladimir Putin confirmed that Russia had recognized the expanded borders of Luhansk and Donetsk after initially indicating that Moscow would recognize only the two separatist-held areas in Eastern Ukraine.
In sign that diplomacy is running out of road, U.S. Secretary of State Antony Blinken said he would no longer meet with Russian Foreign Minister Sergey Lavrov in Geneva this week.
The deepening geopolitics crisis forced the broader market to swing wildly, as brief attempt to stage rebound off session - following Biden's remarks - was soon met with fresh selling pressure.
Consumer discretionary stocks were also a big drag on the broader market, with Home Depot down more than 8% despite reporting better-than-expected fourth quarter results.
Home Depot (NYSE:HD) reported fourth-quarter earnings of $3.21 on revenue of $35.72 billion, underpinned by comparable sales of 8.1%.
Energy stocks ended the day down down 1% as oil prices eased from session highs.
Pioneer Natural Resources (NYSE:PXD), APA (NASDAQ:APA), and Devon Energy (NYSE:DVN) were the hardest hit stocks in the energy sector, with the latter down more than 3%.
Tech, meanwhile, struggled to hold onto its gains after turning positive intraday.
Big tech including Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), and Meta Platforms (NASDAQ:FB) closed lower.
Financials, mostly banks were supported by rising Treasury yields even as the odds of a 50-basis points hike at the Federal Reserve has diminished. The 10-year Treasury yield was flat, but the 2-year Treasury yield, which is swayed by fed rate hikes, was up more than 4%.
Signature Bank (NASDAQ:SBNY), First Republic Bank (NYSE:FRC), People’s United Financial Inc (NASDAQ:PBCT) were among the biggest gainers.
About 30% of traders expect the Fed to raise rates by 50 basis points, down from about 90% last week.
Positive economic news showing the consumer remains in good shape was overshadowed by geopolitical developments.
U.S. consumer confidence index fell to 110.5 in February, though that was ahead of consensus of 110.0. "Despite the dip today, confidence remains above where it recently bottomed in September (109.8)," Jefferies said in a note.
The earnings front served up mixed quarterly results.
Kraft Heinz (NASDAQ:KHC) bucked the trend lower, rising 5% after the food and beverage company boosted its long-term growth guidance and reiterated its guidance for 2022.
Krispy Kreme (NASDAQ:DNUT) reported its maiden quarterly profit since its initial public offering as price hikes helped offset a rise in costs.
In other news, the special purpose acquisition company Digital World Acquisition (NASDAQ:DWAC), which is taking former President Donald Trump's social media app Truth Social, surged 10% on data showing the social media app had strong debut on Sunday as it racked up over 170,000 downloads on Apple's App Store.
