The logo for the New York Stock Exchange (NYSE) is displayed on Wall Street in New York City, U.S., March 22, 2022.
The logo for the New York Stock Exchange (NYSE) is displayed on Wall Street in New York City, U.S., March 22, 2022. Reuters / BRENDAN MCDERMID

All three major U.S. stock indexes ended more than 1% lower on Wednesday as oil prices jumped and Western leaders began gathering in Brussels to plan more measures to pressure Russia to halt its conflict in Ukraine.

Responding to Western sanctions that have hit Russia's economy hard, President Vladimir Putin said Moscow will seek payment in roubles for natural gas sales from "unfriendly" countries, while its forces bombed areas of the Ukrainian capital Kyiv a month into their assault.

Oil prices rallied 5% to over $121 a barrel and natural gas futures also jumped. [O/R] While higher oil prices benefit energy shares, they are a negative for consumers and many businesses. The S&P 500 energy sector rose 1.7% and utilities gained 0.2%, while all of the other major S&P 500 sectors were lower on the day.

"These geopolitical problems are sort of hanging over the market," said Stephen Massocca, senior vice president at Wedbush Securities in San Francisco.

"The resurgence of oil prices is giving people pause," he said, adding, "There needs to be a resolution with Russia. That's going to hold the market back."

The day's decline follows a recent string of gains as the market recovered from lows hit amid the conflict and increased worries about inflation and higher interest rates.

Among the day's biggest drags, Adobe Inc's stock slid 9.3% after the Photoshop maker late Tuesday forecast downbeat second-quarter revenue and profit and sees an impact on fiscal 2022 revenue due to the Russia-Ukraine crisis.

The Dow Jones Industrial Average fell 448.96 points, or 1.29%, to 34,358.5, the S&P 500 lost 55.37 points, or 1.23%, to 4,456.24 and the Nasdaq Composite dropped 186.21 points, or 1.32%, to 13,922.60.

Investors continued to assess the outlook for U.S. interest rates. San Francisco Federal Reserve Bank President Mary Daly said on Wednesday she is open to raising rates by 50 basis points in May, joining other policymakers in saying so.

Last week, the U.S. central bank raised interest rates for the first time since 2018.

Alphabet-owned Google said it will pause all ads containing content that exploits, dismisses or condones the ongoing Russia-Ukraine conflict. Its stock fell 1.1%.

GameStop Corp shares jumped 14.5% after Chairman Ryan Cohen's investment company bought 100,000 shares of the videogame retailer.

Declining issues outnumbered advancing ones on the NYSE by a 1.78-to-1 ratio; on Nasdaq, a 1.81-to-1 ratio favored decliners.

The S&P 500 posted 22 new 52-week highs and four new lows; the Nasdaq Composite recorded 43 new highs and 60 new lows.

Volume on U.S. exchanges was 11.69 billion shares, compared with the 14.62 billion average for the full session over the last 20 trading days.