U.S. stocks fell on Thursday on worries about the raging conflict in Ukraine and the outlook for U.S. interest rate hikes, putting the main indexes on course for their worst quarter since the pandemic crash in 2020.
Optimism around the peace talks this week faded as Ukrainian forces prepared for fresh Russian attacks in the southeast region.
The United States imposed new Russia-related sanctions, while Russian President Vladimir Putin signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1.
Defensive sectors such as real estate, healthcare and utilities were the only gainers among the major S&P sectors. Utilities hit a fresh record high, set to post their best monthly performance since 2002.
The war-induced surge in commodity prices has amplified inflation worries, while a more hawkish Federal Reserve stoked growth concerns, together pushing the three main U.S. indexes toward their worst quarter since March 2020.
The benchmark S&P 500 index, however, has rebounded more than 5% this month on upbeat economic data and a recovery in megacap stocks.
"Investors are expecting a positive earnings season...so the market is ignoring the recession, the yield curve," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
"It's the end of the month, end of the quarter, so you might have some last-minute portfolio switching. And, of course, the market will set itself up for tomorrow's employment data."
The S&P energy index slipped as oil prices plunged over 4% as the United States considers the largest ever release from its Strategic Petroleum Reserve.
Still, the index was set to record its best quarter ever as oil prices have rallied to multi-year highs on supply tightness from the war and concerns around Western sanctions on Russia.
Ahead of Friday's closely watched jobs report, data showed U.S. consumer spending slowed significantly in February, while price pressures continued to mount, with inflation posting its largest annual gain since the early 1980s.
Another set of data showed jobless claims increased more than expected in the week ended March 26.
At 10:23 a.m. ET, the Dow Jones Industrial Average was down 208.57 points, or 0.59%, at 35,020.24, the S&P 500 was down 17.63 points, or 0.38%, at 4,584.82, and the Nasdaq Composite was down 51.61 points, or 0.36%, at 14,390.67.
U.S.-listed shares of Baidu fell 7% after the Chinese search engine giant said it was exploring options after it was added to a U.S. securities regulator's list of companies facing the risk of being delisted. Its streaming affiliate iQIYI dropped 7.6%.
Drugstore chain Walgreens Boots Alliance fell 6.4% after the company kept its 2022 forecast of low-single digit earnings growth unchanged.
Advancing issues outnumbered decliners by a 1.15-to-1 ratio on the NYSE and a 1.02-to-1 ratio on the Nasdaq.
The S&P index recorded 46 new 52-week highs and two new lows, while the Nasdaq recorded 35 new highs and 45 new lows.