Wall Street Heads For Worst Quarter Since 2020

US stocks fell on Thursday on worries about the raging conflict in Ukraine and the promise of US interest rate hikes, putting the main indexes on course for their worst quarter since the pandemic crash in 2020.

Optimism around peace talks this week faded as Ukraine prepared for fresh Russian attacks in its southeast region.

The United States imposed new Russia-related sanctions, while Russian President Vladimir Putin signed a decree saying foreign buyers must pay in roubles for Russian gas from April 1.

Defensive sectors such as real estate, healthcare and utilities were the only gainers among the major S&P sectors. Utilities hit a fresh record high, and are set to post their best monthly performance since 2002.

The surge in commodity prices, driven by events in Ukraine, has amplified inflation worries, while a more hawkish Federal Reserve stoked growth concerns, together pushing the three main US indexes toward their worst quarter since March 2020.

The benchmark S&P 500 index has, however, rebounded more than 5 percent this month on upbeat economic data and a recovery in megacap stocks.

"Investors are expecting a positive earnings season… so the market is ignoring the recession, the yield curve," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

"It's the end of the month, end of the quarter, so you might have some last-minute portfolio switching. And, of course, the market will set itself up for tomorrow's employment data."

The S&P energy index slipped as oil prices plunged over 4 percent. The US is considering its largest-ever release from its Strategic Petroleum Reserve.

Still, the index was set to record its best quarter ever as oil prices have rallied to multi-year highs on supply tightness from the conflict in Ukraine and concerns around Western sanctions on Russia.

Ahead of Friday's closely watched jobs report, data showed US consumer spending slowed significantly in February, while price pressures continued to mount, with inflation posting its largest annual gain since the early 1980s.

Another set of data showed jobless claims increased more than expected in the week ended March 26. (Reuters)