Wall Street lower on Monday as geopolitical tensions between Russia and Ukraine intensified. Market participants were also concerned regarding the Fed’s stance about interest rate hike in March. All three major stock indexes ended in negative territory. Monday marked the three consecutive days of losses for these indexes.

How Did The Benchmarks Perform?

The Dow Jones Industrial Average (DJI) dropped 0.5% or 171.89 points to close at 34,566.17. Notably, 22 components of the 30-stock index ended in red while 8 in green. The tech-heavy Nasdaq Composite finished at 13,790.92, fell marginally by 24 points.

Meanwhile, the S&P 500 slid 0.4% to end at 4,401.67. Nine out of eleven sectors of the benchmark index closed in negative territory while two in green. The Energy Select Sector SPDR (XLE), the Financials Select Sector SPDR (XLF) and the Real Estate Select Sector SPDR (XLRE) dropped 2.4%, 1.1% and 1.1%, respectively.

The major loser of the S&P 500 index was Moderna Inc. (MRNA Quick QuoteMRNA - Free Report) , shares of which plunged 11.7%. Moderna carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The fear-gauge CBOE Volatility Index (VIX) was up 3.6% to 28.33. A total of 11.32 billion shares were traded on Monday, lower than the last 20-session average of 12.67 billion. Decliners outnumbered advancers on the NYSE by a 2.80-to-1 ratio. On Nasdaq, a 2.17-to-1 ratio favored declining issues.

Russia – Ukraine Geopolitical Conflict Intensifies

Stocks fell sharply after White House warned on last Friday that Russia may enter the geographical territory of Ukraine soon. Any Americans still in Ukraine should leave “immediately,” the White House said.  U.S. National Security Advisor Jake Sullivan said that Russia has escalated its military positions in Ukraine border and might enter the bordering country any day even possibly even during the Winter Olympics.

On Monday, U.S. Secretary of State Antony Blinken ordered the U.S. Embassy in Kyiv to close with an immediate effect and directed embassy staff to relocate to Lviv, a city in western Ukraine near the Poland border. Per Blinken, “We are in the process of temporarily relocating our Embassy operations in Ukraine from our Embassy in Kyiv to Lviv due to the dramatic acceleration in the buildup of Russian forces.”

Last week, Pentagon ordered U.S. troops who are deployed in Ukraine to depart that country with an immediate effect for their safety. Several airlines have either halted or redirected their flights to Ukraine amid heightening geopolitical crisis.

A More Hawkish Fed

The Fed has clearly indicated that it will raise interest rate in March, for the first time in three years. Moreover, the uncertainty regarding the pace and magnitude of an interest rate hike by the Fed to contain inflation has injected severe fluctuations in day-to-day trading since mid-January.

On Jan 26, after the conclusion of the first Fed FOMC meeting of this year, Chairman Jerome Powell signaled the first rate hike in three years as early as in March. The central bank’s quantitative easing program will also end in March.

Although the Fed refrained from stating the month and magnitude of the interest rate hike, Powell said, “Inflation risks are still to the upside in the views of most FOMC participants, and certainly in my view as well. There’s a risk that the high inflation we are seeing will be prolonged. There’s a risk that it will move even higher.”

The Fed Chairman further added, “In light of the remarkable progress we’ve seen in the labor market and inflation that is well-above our 2% long-run goal, the economy no longer needs sustained high levels of monetary policy support.”

In a separate press statement, the FOMC has also indicated that the Fed is thinking of shrinking its $9 trillion balance sheet later this year. Powell said, “There’s a substantial amount of shrinkage in the balance sheet to be done. That’s going to take some time. We want that process to be orderly and predictable.”