* Russian stock market, bonds and currency plunge
* Gold and oil climb as Ukraine tensions spur safety bids
* CBOE Volatility Index, the VIX, jumps more than 14 pct
* Dow down 0.9 pct; S&P 500 off 0.7 pct; Nasdaq off 0.7 pct
By Angela Moon
NEW YORK, March 3 U.S. stocks tumbled on Monday
alongside other risky assets globally as tensions in Ukraine and
Russia escalated after Russian President Vladimir Putin declared
he had the right to invade his neighbor.
News that Ukraine mobilized for war on Sunday and Washington
threatened to isolate Russia economically overshadowed
better-than-expected U.S. data, including an index showing that
factory activity rebounded from an eight-month low in February.
The S&P 500 had closed at a record high on Friday, and
profit-taking was expected on Wall Street due to the political
uncertainty. The index found some support when it fell to 1,840,
but broke below it after the first attempt. The S&P 500 extended
losses in early afternoon trading and then recovered slightly to
close above the support level.
"It's too early to tell whether this would be a buying
opportunity because we need to see how this (tension between
Ukraine and Russia) plays out. It depends on how far this
escalates, but I would suggest hedging before making any bets at
this point," said Randy Frederick, managing director of active
trading and derivatives for Charles Schwab in Austin, Texas.
The CBOE Volatility Index, also known as the VIX,
shot up 14.29 percent, its biggest one-day jump in a month, to
end at 16. The VIX, which generally moves inversely to the S&P
500, is used to hedge against the market's further decline. The
VIX is also regarded as Wall Street's barometer of fear.
The Dow Jones industrial average fell 153.68 points
or 0.94 percent, to end at 16,168.03. The S&P 500 slid
13.72 points or 0.74 percent, to finish at 1,845.73. The Nasdaq
Composite dropped 30.818 points or 0.72 percent, to
close at 4,277.301.
Russian stocks and bonds fell sharply and the central bank
raised interest rates to defend the ruble. The
MICEX index of Moscow stocks tumbled 10.8 percent and the
dollar-denominated RTS stock index dropped 12 percent.
The market rout highlighted the damage the crisis could do
to Russia's vulnerable economy, making it harder to balance the
budget and potentially undermining business and public support
In U.S. trading, the Market Vectors Russia ETF fell
as much as 9 percent in heavy volume to a 4-1/2 year low of
$22.16. It ended down 6.8 percent at $22.76.
But the Direxion Daily Russia Bear 3x ETF, a
leveraged play on bad news that could affect the fortunes of the
nation's listed stocks, jumped 21 percent to $20.98.
Energy stocks could lose if relations between the United
States and Russia deteriorate further.
"Anything that involves a boycott of Russian supplies, which
are very significant, could impact the energy sector
dramatically," said Rick Meckler, president of investment firm
LibertyView Capital Management in Jersey City, New Jersey.
"In situations like this, you see very quick reactions
reverse as people understand the scenario and how things play
Brent crude prices rose $2.13 to settle at $111.20
per barrel while U.S. crude prices gained $2.33 to end at
$104.92 a barrel. The S&P energy sector index, which
opened higher, closed down 0.6 percent.
Gold prices hit a four-month high as investors sought
safe-haven assets, boosting gold stocks.
U.S.-traded AngloGold Ashanti shares gained 2.2 percent
Although the focus was on Ukraine, the economic calendar was
busy on Monday. U.S. factory activity rebounded from an
eight-month low in February, according to the Institute for
Supply Management, while the Commerce Department said consumer
spending rose more than expected in January. The data suggested
that the economy was regaining some strength after a recent
About 6.95 billion shares changed hands on U.S. exchanges,
slightly lower than the 7 billion average for the past month,
according to data from BATS Global Markets.
Decliners beat advancers on the New York Stock Exchange by a
ratio of about 2 to 1, while on the Nasdaq, about eight stocks
fell for every five that rose.