Unpleasant tensions for US stocks intensified earlier in the week as the crisis in Ukraine escalated and investors weighed the prospect of further sanctions to hurt the Russian economy as the Kremlin wages war in Eastern Europe.
Against this backdrop, the Dow Jones Industrial Average, DJIA, -2.37%, closed sharply lower on Monday, posting its lowest close since 2022 and closing in corrective territory for the first time in more than two years.
A close below 33,119.685 was the level needed to mark a 10% decline from the January 4 all-time high, which is the commonly used definition of a correction. The Dow Jones ended trading on Monday at 32,817.38.
The Dow Jones average last completed a correction on February 27, 2020 and continued to fall into a bear market, defined as a fall of at least 20% from its recent peak in the midst of a pandemic-driven sell-off two years ago.
The Dow will join the S&P 500 SPX, -2.95%, in corrective territory that the broad-based index entered on Feb. 22 for the first time in two years.
Crude Oil’s CL.1, +1.42% rise as investors pondered the next steps the White House could take to punish Moscow raised fears of a possible global economic recession.
To read: What rising oil prices mean for the US stock market amid talk of Russian oil sanctions
Russia’s unprovoked 12-day invasion of Ukraine has rocked commodity markets and soured relations between the Kremlin and the West as some Russian banks have been removed from the SWIFT payment network, a key mechanism for the transmission of global payments. Most of the Russian stock market remains closed due to the depreciation of the ruble USDRUB, -9.79%.
The fall in US markets also pushed the Nasdaq Composite COMP, -3.62%, into a bear market, defined as a 20% pullback. At Monday’s close, the tech stock index fell 21% from its November 19 close.