U.S. stocks retreated on Monday morning as Russian and Ukraine officials gathered to discuss a potential end to the hostilities between the two sides.

The Dow Jones Industrial Average dropped 400 points, or about 1.2%. The S&P 500 fell 1% and the Nasdaq Composite lost about 0.8%.

The moves come amid turmoil over the conflict between Russia and Ukraine, where Ukrainian forces have held key cities including the capital of Kyiv. At the same time, Ukraine officials have arrived near the border for talks with Russian officials.

“War is fundamentally a ‘risk off’ environment for risky assets as global investors move into sovereign bonds and other ‘safe havens’ until some kind of conclusion/new normal becomes priced in. … Everything about this is unprecedented, so about the only rational thing to say about equities is to expect volatility to continue pending a resolution,” Raymond James strategist Tavis McCourt said in a note.

In U.S. trading, defense stocks like Lockheed Martin and Northrop Grumman rose about 2%. Bank stocks were under pressure, with JPMorgan falling 2.8%.

Currency markets were a major area of volatility on Monday. The Central Bank of Russia more than doubled its key interest rate, to 20% from 9.5% in reaction to a currency move that saw the ruble tumble nearly 16% against the U.S. dollar. The ruble hit a record low against the dollar early Monday.

“We may have seen the sharpest depreciation of the ruble in modern history, but this is hardly a bottom,” wrote Alex Kuptsikevich, FxPro senior market analyst. “It will be possible to talk about movement towards stabilization only after appropriate steps from politicians.”

Over the weekend, the U.S. joined allies in Europe and Canada in moving to bar key Russian banks from the interbank messaging system, SWIFT. The system connects more than 11,000 banks and financial institutions in more than 200 countries and territories.

Russian military vehicles entered Ukraine’s second-largest city Kharkiv with reports of fighting taking place and residents being warned to stay in shelters.

Russian President Vladimir Putin put his country’s nuclear deterrence forces on high alert Sunday amid a growing global backlash against the invasion. Ukraine’s Defense Ministry said representatives for Ukraine and Russia have agreed to meet on the Ukraine-Belarus border “with no preconditions.”

U.S. and global equities experienced volatile trading last week as geopolitical tensions between Russia and Ukraine escalated. Early Thursday morning local time, Moscow launched military action in Ukraine.

U.S. West Texas Intermediate (WTI) crude future rose more than 5% to around $96.30 per barrel on Monday. The April Brent crude futures contract also rose nearly 5% to $102.75 per barrel, while natural gas futures were up 4% to $2.84.

Oil stocks were mixed despite the rise in commodities prices. Solar energy stocks jumped, with Enphase Energy rising roughly 5%, as the conflict made some policymakers more worried about the reliance on fossil fuels.

Government bond yields were sharply lower across the curve, with the benchmark 10-year Treasury note most recently at 1.887%, off nearly 10 basis points on the session. A basis point is 0.01%; yields move opposite prices and were lower amid high demand for save-haven bonds.

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Last week, President Joe Biden reacted to the attack by announcing several rounds of sanctions on Russian banks, on the country’s sovereign debt and Putin and Foreign Minister Sergey Lavrov. The U.S. and European allies have also taken action against Russia’s central bank.

“Some Russian banks being removed from SWIFT (energy transactions exempt) and the freezing of the Russian central bank’s access to its foreign currency reserves held in the West clearly increases economic tail risk,” said Dennis DeBusschere of 22V Research.

However, he believes Russia can still sell oil and there could be “loop holes” in Russia’s frozen assets, which “might limit the disaster in markets for a few days.”

Russia closed its stock exchange on Monday, but the VanEck Russia ETF dropped more than 25% in U.S. trading.

Despite the global volatility, the Dow experienced its best day since November 2020 on Friday.

Last week, the Dow notched its third week of losses. The S&P 500 and Nasdaq ended the week in green, rising 0.8% and 1.1%, respectively.

The Nasdaq Composite is still in correction, about 15% from its record close. The Dow and S&P 500 are just outside of correction territory.

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