By Stephen Culp

NEW YORK (Reuters) – The S&P 500 index ended weaker on Monday, partly recovering from a steep late-afternoon sell-off, as U.S. plans to close its Kyiv embassy in Ukraine sent simmering geopolitical tensions to a boil.

All three major U.S. stock indexes dropped sharply after U.S. Secretary of State Antony Blinken announced the relocation of U.S. diplomatic operations to western Ukraine, in a possible sign of an imminent Russian invasion.

Ongoing concerns over aggressive policy from the Federal Reserve also have contributed to recent market volatility.

“There’s a lot of cross currents, a lot of potential negatives in the markets,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

Ukraine President Volodymyr Zelenskiy urged state officials, politicians and business leaders who had recently left the country to return within 24 hours in a show of national unity.

France’s foreign minister said everything was in place for a Russian attack and that Europe was ready to impose massive sanctions if it happened.

Geopolitical anxieties have been simmering in recent weeks as negotiators scrambled to find a diplomatic path forward as Russia amassed troops along the Ukrainian border.

Still, market fallout due to geopolitical turmoil tends to be fleeting, according to historical data.

“History actually tells investors that military and terrorist strikes tend to have shortlived shocks because they do not result in global recession,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

Adding to the uncertainty were increasingly hawkish comments from St. Louis Federal Reserve President James Bullard. He reiterated his call for a faster rake hike timeline and said the central bank’s “credibility is on the line” in its battle against rising prices.

Recent data showed U.S. inflation at its hottest level in decades, ratcheting up concerns that the Fed could begin hiking key interest rates more aggressively than many had anticipated.

“The market is being felled by a combination punch, with Bullard’s comments as well as increased rhetoric about the imminent invasion by Russia,” Stovall added.

Unofficially, the Dow Jones Industrial Average fell 172.28 points, or 0.5%, to 34,565.78, the S&P 500 lost 17.09 points, or 0.39%, to 4,401.55 and the Nasdaq Composite dropped 0.24 points, or -0%, to 13,790.92.

Fourth-quarter earnings season is approaching the home stretch, with 358 of the companies in the S&P 500 having reported. Of those, 78% have beat consensus estimates, according to Refinitiv data.

NVidia Corp and Walmart Inc are among the high profile companies posting results this week.

(Reporting by Stephen Culp; additional reporting by Devik Jain and Susan Mathew in Bengaluru; Editing by Richard Chang)