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NEW YORK (AP) — Stocks fell worldwide on Thursday after Russia’s attack of Ukraine sent fear coursing through markets and upped the pressure on the high inflation already squeezing the global economy. 

On Wall Street, the S&P 500 sank 1% to continue its dismal start of the year, though it was able to moderate its losses after starting the day down 2.6%. The heaviest losses hit stocks in Europe, after officials called Russia’s nearby moves a “brutal act of war,” with the German DAX down more than 4%. 

Beyond its human toll, the conflict  looks set to send prices rising even higherat gasoline pumps and grocery stores around the world. Russia and Ukraine are major producers not only of energy but also grains and various other commodities. War could upend global supplies, as could sanctions  brought by the United States and other allies. 

Oil prices on both sides of the Atlantic jumped toward or above $100 per barrel to their highest levels since 2014, up more than 5%. As with stocks, prices in Europe swung more sharply than in the U.S. Wholesale prices also shot higher for heating oil, wheat and other commodities. The spot price in Europe for natural gas, for which the continent relies on Russia to supply, jumped as much as 31%.

Increases in energy and food prices could amplify worries about inflation, which in January hit its hottest level in the United States in a couple generations, and what the Federal Reserve will do in turn to rein it in. The Fed looks certain to remove the super-low interest rates that investors love, which helped catapult financial markets and the economy out of their coronavirus-caused plunge. The only question has been how quickly and how aggressively the Fed will move, starting next month. 

Stocks pared their losses through Thursday morning as investors debated whether Russia’s aggression could make the Fed less aggressive about raising rates. In the past, it has delayed big policy decisions amid uncertainty about the Kosovo war and the U.S. invasion of Iraq, for example, according to Goldman Sachs. 

But economists at the bank say they still expect the Fed to raise rates steadily at their upcoming meetings. The Ukraine tensions probably just make it less likely the Fed will start the process off with a bigger-than-usual increase in rates, something a couple Fed officials had recently suggested. 

“The Fed may become more worried about the impact on economic growth and will probably want to to tread more cautiously,” said Kristina Hooper, chief global market strategist at Invesco.

The Fed was already saddled with the incredibly difficult task of raising interest rates enough to stamp out high inflation but not so much as to choke the economy into a recession. Strategists at Evercore ISI said that risk still remains, and has become even more complicated by the attack on Ukraine, but that it’s “substantially greater in Europe relative to the US.”

Many investors also said that past global events, such as an invasion, have had only short-term effects on markets that last a few weeks or months. 

Regardless, bond yields sank in the meantime around the world, a sign that investors were scrambling into anything that may offer safer returns than stocks and other riskier bets. The yield on the 10-year U.S. Treasury fell to 1.93% from 1.97% late Wednesday. Gold also rallied and rose 0.7%, continuing its strong run on worries about Russia and Ukraine. 

On Wall Street, worries about higher interest rates have delivered the heaviest hits on big technology stocks, a turnaround after those companies soared to lead Wall Street out of its coronavirus-caused plummet in 2020. 

The Nasdaq composite, which is full of big tech stocks, slipped 0.1% after paring an earlier loss of 3.4%. The Dow Jones Industrial Average fell 591 points, or 1.8%, to 32,540, as of 11:40 a.m. Eastern time.

Financial markets are in a “flight to safety and may have to price in slower growth” due to high energy costs, Chris Turner and Francesco Pesole of ING said in a report.

In Brussels, the president of the European Commission said Thursday the 27-nation European Union planned “massive and targeted sanctions” on Russia.

“We will hold President Putin accountable,” Ursula von der Leyen said.

The FTSE 100 in London fell 3.7% after Europe awakened to news of explosions in the Ukrainian capital of Kyiv, the major city of Kharkiv and other areas. The CAC 40 in Paris lost 3.9%. 

Moscow’s stock exchange briefly suspended trading on all its markets on Thursday morning. After trading resumed, Russian indexes plunged by more than a third.

“How bad could this get? Well, how long is a piece of string, right?” said Jonas Goltermann, senior global markets economist at Capital Economics. “There aren’t that many obvious examples of this type of shock to markets.”

The closest parallel is Iraq’s invasion of Kuwait in 1990, which sent markets plunging, before they stabilized when the Fed cut interest rates. Then they recovered after U.S. forces intervened, he said. 

“Now that’s clearly a very imperfect comparison,” he said. “But I think what it suggests is that a 10 or 20% fall in global equities is actually quite plausible.” 

Putin said Russia had to protect civilians in eastern Ukraine, a claim Washington had predicted he would make to justify an invasion.

President Joe Biden denounced the attack as “unprovoked and unjustified” and said Moscow would be held accountable, which many took to mean Washington and its allies would impose additional sanctions. Putin accused them of ignoring Russia’s demand to prevent Ukraine from joining NATO and to offer Moscow security guarantees. 

Washington, Britain, Japan and the EU earlier imposed sanctions on Russian banks, officials and business leaders. Additional options include barring Russia from the global system for bank transactions.