By Yasin Ebrahim
Investing.com – The S&P 500 fell Monday, led by financials as investors weighed the impact of the hard-hitting sanctions on Russia over its ongoing invasion of Ukraine.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average fell 1.5%, or 454 points, the Nasdaq fell 0.8%.
The sanctions included booting certain Russia banks from the global payment SWIFT, and freezing Russia central bank’s ability to tap its $640 billion of reserves abroad, which serves as a rainy day fund to protect the economy.
Talks between Russia and Ukraine to find a resolution to the conflict are expected to resume after both said they had agreed “to keep the negotiations going.” But reports that Russia has stepped up its aggression in Kharkiv as it continues to move closer to Kyiv stifled hopes for a successful outcome on talks.
Financials, mostly banks, led the market lower as investors weighed up the exposure of U.S. banks to Russia in the wake of tougher sanctions aimed at crippling Russia’s economy to deter Moscow to end its invasion of Ukraine.
Among the biggest decliners, Citigroup (NYSE:C) fell more than 5% after warning of a $5.4 billion hit from exposure to Russian assets. JPMorgan Chase(NYSE:JPM), meanwhile, suspended its emerging Europe fund and Russia fund, sending its shares more than 4% lower.
As well as the impact of sanctions on Russia, investor sentiment on banks was also hurt by falling U.S. Treasury yields, which trade inversely to prices, as investors fled to safety.
Falling Treasury yields, or rates, hurt the net interest margin of banks, the difference between the interest income generated by banks and the amount of interest paid out to depositors.
Energy was the sole sector in the green, as oil prices jumped 4% on fears of supply disruptions amid ongoing geopolitical tensions.
BP (NYSE:BP), however fell 6% after announcing that it would sell its 19.75% stake in Russian oil company Rosneft at a loss of up to $25 billion. Rival Shell (LON:RDSa) also said it would exit all its Russia operations that could result in impairments of about $3 billion.
Defense stocks, which benefit during times of war, were up sharply, with Northrop Grumman (NYSE:NOC) and Lockheed Martin (NYSE:LMT) rising more than 1%.
In other news, electric vehicle stocks were in the ascendency on bets that soaring energy prices would hasten the adoption of EVs.
Tesla (NASDAQ:TSLA) jumped 6% after Bernstein hiked its price target on the company to $450 from $300.