Mid-day: Things are not looking good for the stock market

The S&P 500 (-2.2%), Dow Jones Industrial Average (-2.0%), and Nasdaq Composite (-2.1%) are down around 2% amid consternations surrounding Russia-Ukraine and oil prices ($118.70, +3.02, +2.6%).

The stock market has reverted to what the futures market was initially signaling after oil prices hit $130 per barrel last night. The spike in oil was catalyzed by news that the U.S. and allies are discussing a potential ban on Russian oil imports, but the retracement has coincided with a softer stance from Germany and an agreement between the foreign ministers of Russia and Ukraine to meet on Thursday.

The S&P 500 opened little changed but has since embarked on a steady retreat paced by the mega-caps. The Vanguard Mega-Cap Growth ETF ( MGK 212.97, -5.60, -2.6%) is down 2.6%, and ten of the 11 S&P 500 sectors are trading lower.

The consumer discretionary (-3.1%), communication services (-2.7%), information technology (-2.2%), financials (-2.8%), and materials (-2.8%) sectors are down between 2-3%, while the utilities sector (+0.4%) is the only sector trading higher.

Interestingly, not even the energy sector (-0.4%) is trading higher. To be fair, it was up 3.1%, but concerns about higher oil prices leading to demand destruction and, in turn, lower earnings potential have presumably pinned down the sector.

Staying in the energy space, Oasis ( OAS 146.34, +1.85, +1.3%) and Whiting ( WLL 83.71, +0.28, +0.3%) agreed to a $6.0 billion merger of equals while famed investor Carl Icahn reportedly divested his stake in Occidental ( OXY 53.18, -2.92, -5.2%).

Elsewhere, travel-related stocks are selling off, particularly the airlines as the higher oil prices threaten to curb profit margins. The U.S. Global Jets ETF ( JETS 17.52, -1.51, -7.9%) is down approximately 8% right now.

The Treasury market has been one area of relative comfort since the 10-yr yield is up two basis points to 1.74% despite the weakness in the equity market. It was trading at 1.70% overnight.

Investors have not received any new economic data today, but they will later when the Consumer Credit report for January is released at 3:00 p.m. ET.