Despite a 170-point drop, the Nasdaq experiences a late rally for a slight gain as investors keep a close eye on the Ukraine invasion.

On Monday, volatile trading occurred with stocks being split as investors closely watched the Russian invasion of Ukraine and the new batch of sanctions imposed by the U.S. and its allies.

The Dow Jones Industrial Average fell 166.15 points, or 0.49%, but finished above session lows at 33,892.60. The S&P 500 ended down 0.24% at 4,373.94, while the Nasdaq gained 0.41% to 13,751.40.

The major averages experienced significant monthly declines in February, culminating in a downward trend on Monday.

Amidst conflict between Russia and Ukraine, where Ukrainian forces hold key cities including Kyiv's capital, officials from both countries met for negotiations near the Belarus border on Monday.

According to Raymond James strategist Tavis McCourt, war is a "risk off" environment for risky assets as global investors move towards sovereign bonds and other "safe havens" until a conclusion or new normal is priced in. Since everything about this situation is unprecedented, the only rational thing to expect about equities is continued volatility until a resolution is reached.

The Nasdaq was down, but defense and cybersecurity stocks helped mitigate the decline. Lockheed Martin and Northrop Grumman rose 6.7% and 7.9%, respectively, while Crowdstrike jumped 7.4%.

JPMorgan and Citigroup experienced significant declines, with JPMorgan falling 4.2% and Citigroup dropping 4.4%.

The 10-year Treasury note yield dropped by 15 basis points to 1.83%, while government bond yields across the curve were also lower. Yields move in the opposite direction of prices, and this decline occurred amid high demand for safe-haven bonds.

On Monday, Tesla's shares increased by 7.5%, and the tech-heavy Nasdaq Composite outperformed due to lower bond yields, which tend to benefit growth-oriented stocks.

On Monday, currency markets experienced significant volatility, with the ruble falling nearly 22% against the U.S. dollar. In response to this currency move, the Central Bank of Russia raised its key interest rate more than double, from 9.5% to 20%. The ruble reached a new record low against the dollar early in the day.

The US, along with European and Canadian allies, decided to exclude key Russian banks from the SWIFT interbank messaging system, which connects over 11,000 banks and financial institutions in more than 200 countries and territories.

Russia's central bank has been frozen by the U.S. and European allies, effectively draining its foreign reserves.

Some investors and traders were searching for potential disruptions in financial markets beyond Russia due to the sanctions.

According to Dennis DeBusschere of 22V Research, the removal of some Russian banks from SWIFT and the freezing of the Russian central bank's access to its foreign currency reserves held in the West increases economic tail risk, particularly for energy transactions.

Russia can still sell oil, and there may be "loop holes" in its frozen assets that could temporarily mitigate the market disaster.

Russian military vehicles entered Ukraine's second-largest city, Kharkiv, with reports of fighting taking place and residents being warned to stay in shelters. Meanwhile, Russian President Vladimir Putin put his country's nuclear deterrence forces on high alert Sunday amid a growing global backlash against the invasion.

Despite a strong rally at the end of last week, the three major U.S. averages all fell more than 3% for the month, with the Dow being the worst performer and experiencing its worst month since November.

Before the invasion of Ukraine, the Nasdaq, which is heavily weighted towards tech stocks, was already experiencing a decline.

Phillip Toews, CEO of Toews Asset Management, stated that the conflict arises from our existing base case, which suggests that we were already at risk of a bear market due to valuations, rising rates, inflation, and the absence of a Fed put.

Despite some short-term rallies like last week, Toews stated that the markets are not looking great at the moment.

Futures for commodities such as oil and natural gas experienced varying movements on Monday. Oil futures increased by approximately 5% to around $95.91 per barrel, while natural gas futures decreased slightly.

Despite the increase in commodity prices, oil stocks experienced mixed performance. The shares of BP and Shell in London declined sharply, while Occidental Petroleum's stock rose by nearly 13%.

The conflict prompted some policymakers to worry about the reliance on fossil fuels, resulting in a more than 8% increase in solar energy stocks, particularly Enphase Energy.

On Monday, Russia shut down its stock exchange, while the in U.S. trading plummeted by 30%. European banks, particularly Deutsche Bank, experienced significant losses due to their exposure to Russia.