Tensions with Syria sink U.S., European stocks
NEW YORK (AP) — Stocks declined broadly in midday trading Tuesday as investors feared that the possibility of a U.S. military intervention in Syria could become a reality.
The Dow Jones industrial average lost 98 points, or 0.6 percent, to 14,851 as of noon EDT. The Standard & Poor's 500 fell 15 points, or 0.9 percent, to 1,641 and the Nasdaq composite dropped 45 points, or 1.2 percent, to 3,612.
Investors have fretted about U.S.-led military action against the regime of President Bashar Assad since Secretary of State John Kerry said Monday that it was "undeniable" that the Syrian government used chemical weapons.
"The law of unintended consequences and the history of previous military interventions in the region is not a recipe for political and economic stability," said Neil MacKinnon, global macro strategist at VTB Capital.
Traders moved money into investments typically considered safe during times of crisis or uncertainty, like gold and U.S. government bonds. Gold rose $27, or 2 percent, to $1,420.20 an ounce while the yield on the benchmark 10-year Treasury note fell to 2.76 percent from 2.79 percent Monday.
"People worry about this becoming a worst-case scenario and turning into a regional conflict," said Bill Stone, chief investment strategist at PNC Asset Management.
Oil prices also rose. While Syria itself has little oil to impact energy prices, traders feared an intervention in Syria could cause further instability in the Middle East and possibly disrupt the flow of oil from the region. Oil jumped $2.77, or 2.8 percent, to $108.70 a barrel, the highest price since May 2011.
Energy prices dragged down the airline sector on concerns that higher oil prices could lead to higher fuel costs. United Continental Holdings, the world's largest airline by revenue, dropped $2.41, or 8 percent, to $27.44 and Delta Air Lines lost $1.27, or 6 percent, to $19.
Stone said oil prices could start weighing on consumer spending down the road, but it is still too early to gauge the longer-term impact.
Concerns over a U.S.-Syria conflict spilled over into global markets.
In Europe, the Britain's FTSE 100 index fell 0.8 percent at 6,440 while Germany's DAX fell 2.3 percent to 8,242. The CAC 40 in France was 2.4 percent lower at 3,968.
In corporate news, discount shoe seller DSW jumped $6.44, or 8 percent, to $87.76 after the company reported an adjusted profit of 97 cents per share, easily beating analysts' estimate of 80 cents per share, according to FactSet.
J.C. Penney rose 46 cents, or 3.5 percent, to $13.81 after the company's biggest investor, Bill Ackman, said he plans to sell his entire stake in the discount department store chain.
Wall Street is also digesting two economic reports, one on U.S. consumer sentiment, the other on home prices. The Conference Board said its consumer confidence index rose to 81.5 in August, up from 80.3 the month before. Economists had expected 79, according to FactSet.
The Standard & Poor's/Case-Shiller 20-city home price index rose 12.1 percent in June from a year earlier, nearly matching a seven-year high. But month-over-month price gains slowed in most markets, a sign that higher mortgage rates may be weighing on the housing recovery.
AP Business Writer Pan Pylas contributed from London.