NEW
YORK: Wall Street stocks suffered their worst day since June on
Tuesday, slumping in a broad decline as geopolitical uncertainty rose
over a possible U.S.-led military strike by the West against Syrian
President
Bashar al-Assad's forces.
The S&P 500 closed
under its 100-day moving average for the first time since June 24, a
sign of weak near-term momentum. The day's fall extended recent declines
on uncertainty over when the U.S. Federal Reserve will start to slow
its stimulative monetary policies.
Odds grew that a strike
would occur against al-Assad's forces for a chemical weapons attack
against civilians as a number of nations and groups - including
Britain,
France,
Canada and the
Arab League - joined Washington in urging a firm response to Assad. Adding to the tension,
Russia has supported Assad
Syria's civil war.
"This (stocks) move is as
much about the potential spillover effect in the region as it is the
potential for a U.S. strike," said
Leo Grohowski, chief investment officer at
BNY Mellon Wealth Management,
adding that because geopolitical risk had been "ratcheted up,"
portfolios would need to be reallocated away from riskier investments
like stocks.
"Doing that in a market that was already acting sloppy is cause for further weakness," he said.
Investor nervousness was reflected in a jump of more than 20 percent in the
CBOE volatility index <.VIX> over the last two days. The uncertainty also lifted gold to a 15-week peak.
Western sources who attended a meeting in
Istanbul between envoys of an alliance opposed to Assad and the
Syrian National Coalition said "action to deter further use of chemical weapons by the Assad regime could come as early as in the next few days.
Defense Secretary
Chuck Hagel said U.S. military forces in the region are "ready to go" should President
Barack Obama order action against
Syria.
About 80 percent of
companies traded on both the New York Stock Exchange and Nasdaq fell,
while all 10 S&P 500 sectors ended down.
Financials <.SPSY>
and materials were the weakest of the day, with both falling about 2.5
percent. Both groups are closely tied to the pace of economic growth, as
are energy shares. However, losses in that group were offset by a 2.8
percent rise in crude oil.
"The potential disruption of
Middle East oil
supply will not only provide support for commodities, but this is a
sector that has underperformed, where valuations are compelling," said
Grohowski, who helps oversee $175 billion in client assets in New York.
The Dow Jones industrial
average <.DJI> was down 170.33 points, or 1.14 percent, at
14,776.13. The Standard & Poor's 500 Index <.SPX> was down
26.30 points, or 1.59 percent, at 1,630.48. The
Nasdaq Composite Index <.IXIC> was down 79.05 points, or 2.16 percent, at 3,578.52.
Tuesday marked the
biggest daily decline for the S&P since June 20. The benchmark index
is now down 2.9 percent in August, putting it on track for its worst
month since May 2012.
Volume was light, with
about 6.18 billion shares changing hands on the New York Stock Exchange,
the Nasdaq and NYSE MKT, below the daily average of about 6.31 billion
shares so far this year.
Goldman Sachs
fell 3 percent to $153.23 a day after a source said the
company lost tens of millions of dollars after a computer glitch led to a
flood of erroneous options trades last week.
Shares of Tiffany &
Co
dipped 1 percent to $80.82 after it reported
second-quarter sales that missed expectations, although the jeweler
raised its full-year profit view on strong results in China.
Goodyear Tire and Rubber
Co rose 2 percent to $19.01 as the S&P's biggest gainer
after the company detailed a new master labor contract.
U.S. regulators have
asked Nasdaq OMX Group and NYSE Euronext to
come up with a timeline of Thursday's three-hour trading disruption.
But the rival exchange operators have been unable to agree on the
details, according to several sources familiar with the situation.
Shares of Nasdaq OMX fell 2.3 percent to $29.94 while NYSE Euronext fell 1.2 percent to $41.81.- Reuters
The Star Online
Wednesday August 28 2013.