Wall Street tumbles as Russia-Ukraine crisis sows fear; Dow falls over 2%

Wall Street slumped on Tuesday, with financial stocks bearing the brunt of the damage for a second straight day as the Russia-Ukraine crisis deepened and stirred anxiety among investors.

All 11 major S&P sectors declined, with financials tumbling 4.3% and tracking their biggest daily percentage decline since June 2020.

Wells Fargo lost 6.1%, while the broader banks index slid 5.7% as U.S. 10-year Treasury yields slumped to five-week lows amid a flight to safe-haven debt.

Chevron Corp climbed 2.7% to hit a record high after the oil major also raised its share buyback program and forecast for operating cash-flow through 2026, and as oil prices surged.

Russia warned Kyiv residents to flee their homes and rained rockets on the city of Kharkiv as Russian commanders intensified their bombardment of Ukrainian urban areas in a shift of tactics after their six-day assault stalled.

The conflict has drawn sharp reprisals from the West including the blocking of certain Russian lenders' access to the SWIFT international payment system.

"Investors are swimming in a soup of fear, and they don't know how to incorporate geopolitical news into their pricing," said Mike Zigmont, head of research and trading at Harvest Volatility Management in New York. "We're dealing with a pure emotional investor response."

In afternoon trading, the Dow Jones Industrial Average was down 2.17% at 33,155.71 points, while the S&P 500 lost 1.85% to 4,293.11.

The Nasdaq Composite dropped 1.65% to 13,525.13.

The S&P 500 has now lost about 10% in 2022, while the Nasdaq is down over 13%.

On a bright spot, data showed U.S. manufacturing activity picked up more than expected in February as COVID-19 infections subsided, while construction spending surged in January.

"Given the fact that the U.S. economy is accelerating, the uncertainty will be relatively short lived and it wouldn't be a surprise if the market found its footing, sometime over the next couple of weeks when clarity is restored," said Jeff Schulze, investment strategist at ClearBridge Investments.

Target Corp jumped almost 11% after the big-box retailer forecast 2022 sales and profit above analysts' expectations.

Defense added to recent gains, with Lockheed Martin Corp rallying 4.8%, Northrop Grumman climbing 2.8%$ and L3Harris Technologies rising 2.5%.

The CBOE volatility index, also known as Wall Street's fear gauge, was last trading at 34.4, its highest since Feb. 24.

Zoom Video Communications Inc slid 5.2% as it forecast downbeat full-year revenue and profit, signaling a hit from tough competition and lower sign-ups for its core Meetings platform.

Declining issues outnumbered advancing ones on the NYSE by a 1.60-to-1 ratio; on Nasdaq, a 1.72-to-1 ratio favored decliners.

The S&P 500 posted 26 new 52-week highs and 15 new lows; the Nasdaq Composite recorded 38 new highs and 121 new lows.