2014.03.0405:57:21UTC+00US stocks plunge as Ukraine-Russia tension escalates

The US shares tumbled on Monday along with other risky assets worldwide, as upheaval between Ukraine and Russia rose following Russian President Vladimir Putin asserted he had the right to raid his neighbor.

News that Ukraine mobilized for war last Sunday and Washington threatened to insulate Russia economically eclipsed better than anticipated US data, including an index showing the factory activity retreated from an eight-month low in February.

The S&P 500 ended at a record high last Friday and profit taking was anticipated on Wall Street due to political uncertainty. The index saw some support when it fell to 1,840 but broke below it following its first attempt. The S&P 500 stretched losses in early afternoon trading and recouped slightly almost above the support level.

The CBOE Volatility Index, also called VIX, surged up 14.29%, its largest one-day leap in a month, to end at 16. The VIX, which moves inversely to the S&P 500 in general, is used to hedge versus the market's further decline. The VIX is also viewed as Wall Street's benchmark of fear.

The Dow Jones industrial average dropped 153.68 points or 0.94%, to close at 16,168.03. The S&P 500 tumbled 13.72 points or 0.74%, to end at 1,845.73. The Nasdaq Composite dived 30.818 points or 0.72%, to finish at 4,277.301.

Russian stocks and bonds plummeted sharply and the central bank escalated interest rates to protect the ruble. The MICEX index of Moscow stocks slipped 10.8% and the dollar-denominated RTS stock index tumbled 12%. The market rout emphasized the damage the crisis could do to Russia's hazardous economy, making it more difficult to balance the budget and potentially underpinning business and public support for Putin.

In U.S. trading, the Market Vectors Russia ETF glided 9% in massive volume to a 4-1/2 year low of $22.16. It finished down 6.8% at $22.76. But the Direxion Daily Russia Bear 3x ETF, a leveraged play on bad news that could influence the chances of the country's listed stocks, leaped 21% to $20.98.

Energy stocks could lose if relations between the United States and Russia worsen. Although the attention was on Ukraine, the economic calendar was busy on Monday. US factory activity bounced back from an eight-month low in February, based on the Institute for Supply Management, while the Commerce Department said consumer spending increased more than anticipated in January. The data implied the economy was recovering some strength after a recent downturn.

Around 6.95 billion shares changed hands on US exchanges, slightly lesser than the 7 billion average for the last month, based on the data from BATS Global Markets. Decliners outmatched advancers on the New York Stock Exchange by a ratio of around 2 to 1, while on the Nasdaq, about eight stocks went down for every five that gained.