By Anora Mahmudova and Victor Reklaitis, MarketWatch

NEW YORK (MarketWatch) -- U.S. stocks ended sharply lower Thursday as selling took hold after a Malaysia Airlines jet crashed near the Ukraine-Russia border.

Investors turned to assets perceived as havens, such as U.S. Treasurys and gold, pushing their prices sharply higher. Read also: Malaysia Airlines crash triggers risk-off reaction.

The S&P 500 (SPX) closed down 23.45 points, or 1.2%, to 1,958.12, its biggest one-day drop since April 10. The Dow Jones Industrial Average (DJI) dropped 161.39 points, or 0.9%, to 16,976.81, its biggest one-day point decline since May 15.

The Nasdaq Composite (RIXF) ended the day down 62.52 points, or 1.4%, at 4,363.45.

Geopolitical risks intensified after news that a Ukrainian fighter jet was shot down by missiles from a Russian plane. Then came reports that a Malaysia Airlines plane had crashed in Ukraine.

Those developments came after the U.S. unveiled a new round of sanctions against Russia, and the European Union said it would detail new sanctions against Russia by the end of this month. European stocks fell sharply on Thursday. Read: Russian stocks pounded after U.S. imposes new sanctions.

"Today's selloff makes sense given that there's been a concern among investors in the last few months that the U.S. could become more closely intertwined in the conflict between Ukraine and Russia," said Kristina Hooper, U.S. investment strategist at Allianz Global Investors. She said there are "so many question marks right now" about the news from Ukraine, and it likely will take a few days for investors to process the implications.

"Those investors who have a longer-term time horizon shouldn't be selling," Hooper added.

Earlier, the market digested a mixed bag of earnings reports and economic data. Reports on weekly jobless claims and manufacturing activity in the Philadelphia area came in better than expected. But construction on new U.S. homes was far weaker than expected, tumbling to the slowest pace in nine months.

Microsoft plans major layoffs, SanDisk results disappoint

In corporate news, Microsoft Corp. (MSFT) shares rallied 1% after the tech company said it would cut 18,000 jobs over the next year in a bid to simplify operations and integrate its Nokia Devices and Services business. It also said it would take a restructuring charge between $1.1 billion and $1.6 billion over the next year.

Mattel (MAT) shares fell 6.6% as quarterly earnings were dragged lower by muted sales of Barbie dolls.

SanDisk (SNDK) shares sank 14% after the flash-memory maker's third-quarter revenue forecast was lighter than anticipated. Read more about the day's notable movers here.

After trading closes Thursday, Google (GOOG) is expected to post earnings of $6.25 a share on revenue of $12.3 billion. Shares were down 1.7%. Read Need To Know: Janet Yellen might disagree, but Amazon tapped as screaming buy.

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