US stocks have fallen sharply as investors recoil from equities in the face of mounting tensions over Ukraine.

At the closing bell on Monday, the Dow Jones Industrial Average fell 154.83 points (0.95 per cent) to 16,166.88.

The broad-based S&P 500 lost 13.76 (0.74 per cent) at 1,845.69, while the tech-rich Nasdaq Composite Index declined 30.82 (0.72 per cent) to 4,227.30.

The selling followed sharp losses in European equity markets.

“It’s all about the flight to safety,” said Michael James, managing director of equity trading at Wedbush Securities.

On Monday, President Barack Obama warned that the United States was planning economic and diplomatic sanctions to “isolate” Russia if it does not reverse its incursion into Ukraine.

“Everything has taken a backseat … to Russia and the potential impact for worldwide markets,” said James. “The safest thing to do is sell first and ask questions later.”