Citigroup Inc. and Bank of America Corp. each lost 1.5 percent as financial stocks tumbled. The Market Vectors Russia ETF tracking companies from Gazprom OAO to OAO Lukoil dropped 8.2 percent. Yandex NV, a U.S.-listed online search engine operating in Russia, slumped 8.7 percent.
“We never know what will happen with Russia and this always makes people nervous,” said Michael Morris, head of equities at Mitsubishi UFJ Asset Management in London. “You have a president that is trying to expand Russia’s global political powers but the country may not have the capacity for this fight. It’s too soon to know what the outcome might be but I’m not at all surprised to see the markets down today.”
The tensions sent stocks tumbling around the world, with the MSCI All-Country World Index sliding 0.9 percent. Russian stocks had their biggest decline in five years and the Europe Stoxx 600 plunged 2 percent, its biggest slide in five weeks. Emerging-market stocks dropped 1.5 percent. Gold soared 1.8 percent and Treasuries rallied.
Ukraine mobilized its army and called for foreign observers after Russian President Vladimir Putingot approval to use military force in Ukraine. Groups of as many as 100 Russian soldiers attacked Ukrainian army units in Crimea, where ethnic Russians comprise the majority, the border guard service said.
U.S. Secretary of State John Kerry is traveling to Kiev today after warning of possible sanctions against Russia. European Union foreign ministers will hold an emergency meeting today, while the Group of Seven nations suspended planning for the Group of Eight summit in Russia in June.
The geopolitical tension comes after the S&P 500 rose 4.3 percent in February, the most since October, to end the month at a record 1,859.45. Investors have been speculating that recent weakness in data from housing to jobs was caused by weather and that the Federal Reserve will continue to support the economy.
U.S. equities are set to enter the sixth year of a bull market that started March 9, 2009. Three rounds of stimulus have helped push the S&P 500 up 175 percent from a 12-year low.