Dow falls nearly 600 points as Russia says it will begin attacks on Kyiv

What’s driving markets

Russia on Tuesday stepped up its shelling of Kharkiv, Ukraine’s second-largest city. There wasn’t any tangible progress made in cease-fire talks between Russia and Ukraine held near Ukrainian border with Belarus on Monday, though the two sides agreed to keep talking. Meanwhile, satellite images showed a 40-mile convoy of Russian tanks and other military vehicles advancing on Kyiv, the capital.

Russia’s Defense Ministry said it would begin strikes against Ukrainian intelligence and information facilities in Kyiv, warning residents living nearby to leave their homes, The Wall Street Journal reported.

“Investors fear that Russia has gone too far to blink first,” said Fawad Razaqzada, analyst at ThinkMarkets, in a note.

“If you ever wondered how headline-driven markets looked like, well this is it. After staging an impressive recovery on Monday to close the weekend gaps, the major indices have started the new month on the back foot once again. This is hardy surprising given Ukrainian situation and the impact sanctions on Russia is having on the wider global markets,” he said, noting some European banks have large exposure to Russian lenders.

Oil prices soared and remained sharply higher despite an agreement by member countries of the International Energy Agency, including the U.S., to release 60 million barrels of crude from strategic reserves. The U.S. benchmark
CL.1,
+9.01%
was up 8% at $103.44 a barrel on the New York Mercantile Exchange, after trading as high as $104.99 — its highest since 2014.

Investors continued to snap up Treasurys, pushing down yields, and other havens. The yield on the 10-year Treasury note
TMUBMUSD10Y,
1.710%,
which had hovered around 2% ahead of the invasion, was down nearly 11 basis points around 1.73%.

The Institute for Supply Management said its manufacturing index rose to 58.6% in February, up from a 14-month low of 57.6 a month earlier. Economists polled by The Wall Street Journal forecast the index to rise to 58%. Any number above 50% signifies growth. 

“The manufacturing sector remains on a solidly expansionary footing despite tight inventories, rising costs, supply-chain challenges and a tough hiring environment. Demand remains strong,” said Jim Baird, chief investment officer at Plante Moran Financial Advisors.

Companies in focus

• Shares of Target Corp.
  TGT,
  +9.76%
  soared 12% after the retailer delivered better-than-expected fourth-quarter profit and offered upbeat guidance, offsetting a revenue miss.

• Zoom Video Communications Inc.
  ZM,
  -4.17%
  warned of a big slowdown in sales growth this year and said it would spend big for futures opportunities, while also announcing a plan to repurchase $1 billion in stock. Shares fell 3.7%.

• Shares of Workday Inc.
  WDAY,
  +6.45%
  rose 7% after the human-resources cloud-software company topped estimates for the quarter and forecast a subscription revenue range that exceeded the Wall Street consensus.

• HP Inc.
  HPQ,
  -0.55%
  late Monday reported a steep increase in personal computer sales and overall revenue, while offering strong guidance for its fiscal year. Shares were off 0.4%.

Other assets

• The ICE U.S. Dollar Index
  DXY,
  +0.82%
  rose 0.6%.

• Gold futures
  GC00,
  +2.19%
  rose 1.6% to $1,930 an ounce.

• Bitcoin
  BTCUSD,
  +4.77%
  was up 1.6% near $43,900.

• The Stoxx Europe 600
  SXXP,
  -2.37%
  fell 2%, while London’s FTSE 100
  UKX,
  -1.72%
  was down 1.4%.

• Equities rose in Asia, with the Shanghai Composite
  SHCOMP,
  +0.77%
  ending 0.8% higher, while the Hang Seng Index
  HSI,
  +0.21%
  edged up 0.2% in Hong Kong and Japan’s Nikkei 225
  NIK,
  +1.20%
  rose 1.2%.