Dow drops more than 600 points in worst decline of 2022 as Russia-Ukraine tensions worry investors

Stocks slumped Thursday amid heightened tensions between Russia and Ukraine with confused investors dumping risky assets and rotating into bonds. The Dow Jones Industrial Average posted its worst daily performance of the year on a points and percentage basis.

The blue-chip average shed about 622.24 points, or 1.8%, to 34,312.03, steadily declining throughout the trading day. The S&P 500 dipped 2.1% to 4.380.26. The Nasdaq Composite fell 2.9% to 13,716.72.

"In the short term, the market is just moving to the indications that it's seeing out of Russia," Yung-Yu Ma, chief investment strategist at BMO Wealth Management, said. "That negativity and that additional cloud over the market definitely has a lot of weight right now."

Stocks tanked last Friday after U.S. National Security Advisor Jake Sullivan warned Russia could invade Ukraine "any day now." But then earlier this week, stocks recovered after tensions apparently cooled with the Russian Ministry of Defense said it was beginning to pull back troops from the Ukraine border.

On Thursday, the fear returned to markets. President Joe Biden on Thursday warned that the threat of Russia invading Ukraine is "very high," telling reporters that an attack could come within "the next several days."

The U.S. Ambassador to the United Nations said the conflict had reached a "crucial moment" and that Russia is moving toward "an imminent invasion." Ukraine accused pro-Russian separatists of attacking a village near the border. 

The VanEck Russia exchange-traded fund, which tracks shares of companies tied to the country, fell around 5% on Thursday.

The sell-off in stocks was broad-based, with technology leading S&P 500 sectors lower Thursday.

Consumer staples — known as defensive stocks that tend to be stable regardless of how the overall market performs — were the top-performing sector, rising nearly 1%.

Walmart led the consumer staples sector after a quarterly report that topped expectations and reaffirmed guidance. The big-box retailer's shares rose 4%.

Meanwhile, market participants bid up safe-haven assets. Gold futures rose more than 1%, and the benchmark U.S. 10-year Treasury yield, which moves inversely to price, fell below 2% as bond prices gained.

Investors also digested a slew of corporate earnings reports.

"Not only is the market trying to navigate the geopolitical tensions between Russia and Ukraine, it's also trying to navigate an earnings minefield," Adam Sarhan, CEO of 50 Park Investments, said.

Palantir sunk 15.8% after the company missed profit expectations. Nvidia fell 7.5% despite a better-than-expected earnings report as the chip maker's first-quarter gross margin guidance came in slightly lower than analysts expected.

Cisco rose 2.7% after the company also topped estimates and raised guidance. DoorDash saw its shares jump 10.7% after reporting better-than-expected revenue and order numbers.

On the economic front, weekly jobless claims numbers came in at 248,000, rising from the previous week and above the 218,000 expected, according to a Dow Jones estimate. Housing permits for January showed a surprise increase, but housing starts lagged expectations.

For the week, all three major averages are in negative territory.

—CNBC's Jesse Pound contributed to this report.