The Dow Jones Industrial Average rose Monday to kick off an important week, as oil prices fell sharply and traders monitored the latest developments from the Ukraine-Russia war.

The Dow gained 250 points, or about 0.7%. The S&P 500 was flat, while the Nasdaq Composite slid 1%.

Those moves came as commodity prices, which had been surging recently amid the conflict, cooled off.

U.S. crude futures slid 7.4% to $101.18 per barrel, while the international Brent benchmark fell 7% to $104.84 per barrel. West Texas Intermediate briefly dipped below $100, trading below that level for the first time since Feb. 24.

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Gold futures slipped 1.4% to $1,957.60 per ounce. Palladium dropped 13.3% to $2,426 per ounce and was on pace for its worst day since March 2020.

“The recent moves in a range of commodity prices are extreme, and if these moves hold for a prolonged period of time, the economic damage would be significant, but we still do not believe recession needs to be the base outcome, and do not see equities falling from current levels,” JPMorgan strategist Mislav Matejka said in a note.

Shares of energy companies fell with oil prices. Devon Energy dropped 9%, while Occidental Petroleum lost more than 5%, and Diamondback Energy fell 3.6%. The Energy Select Sector SPDR Fund was lower by 3%.

Wall Street also kept an eye on the Ukraine-Russia war, as the two countries resumed talks. A Ukrainian official said the country’s objectives were to secure a ceasefire and an immediate withdrawal of Russian troops, along with other security guarantees.

Fighting has intensified around Ukraine’s capital, Kyiv, while Russian forces bombard cities across the country, killing civilians who are unable to escape. The financial fallout of stiff Russian sanctions will come into sharper focus in the coming days ahead of a scheduled sovereign bond payment.

“The escalation in natural resources is taking another break today as risk markets are digesting the next steps of the Russia-Ukraine war and the direction that the Federal Reserve will take with their rhetoric on Wednesday,” said Keith Buchanan, portfolio manager at Globalt Investments.

The market is already becoming less surprised with each new surprise, he added.

As with Covid-19 two years ago in March, “the market started to form a bottom when – although it couldn’t foresee how bad things would get – it understood the ramifications of what could potentially happen,” he said. “If that’s the case with how we see this conflict, the markets will make a bottom before the disaster is behind us, and we’re starting to see some signs that could start happening fairly soon.”

Fed rate hike expected

The Fed is expected to raise its target fed funds rate by a quarter percentage point from zero at the end of its two-day meeting Wednesday. Investors are also looking to the central bank for its new forecasts for rates, inflation and the economy, given the uncertainty from the escalated geopolitical tensions.

“At the moment, the Fed is expected to be cautious when it comes to interest rate policy in 2022, given the conflict in Ukraine,” Lindsey Bell, chief markets and money strategist at Ally. “The conflict is adding complexity to the Fed’s already difficult job. The central bank will likely remain data-dependent as it makes rate decisions throughout the year.”

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U.S. Treasury yields jumped to start the week, with the benchmark 10-year rate reaching its highest level since July 2019. That move gave stocks in the financials sector a lift.

American Express and Visa led the Dow higher, adding 3.5% and 3.3%, respectively. The S&P 500 financials sector popped 2.4% to lead the broad market index higher.

Health-care stocks also rose after a Covid-19 spike in China that led Shenzhen — a major city in a key manufacturing hub in China — to shut down all nonessential businesses and impose city-wide testing.

The sector gained 1.9%, led by Moderna and Pfizer. Shares of Moderna gained 13.6%, and Pfizer advanced 4.4%.

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