The growing threat of U.S. military involvement in Syria sent stock prices sharply lower Tuesday.
The Dow Jones industrial average fell 170.33 points to 14,776.13. The index has dropped in 13 of the past 17 sessions. The Nasdaq Composite Index declined 79.05 points to 3,578.52. The Standard & Poor’s 500 Index lost 26.30 points to 1,630.48.
For the day, the Nasdaq fell 2.2 percent, the S&P lost 1.6 percent and the Dow was down 1.1 percent.
Investors ignored positive news on home prices, up 2.2 percent in June according to the Case-Shiller home price index, and an unexpected increase in consumer confidence as reported by the Conference Board.
Commodity prices were sharply higher as investors sought protection from the risk in Syria. Oil rose $3.09 to $109.01 a barrel, up 2.9 percent. Gold gained $27.10 to $1,420.20 an ounce.
Financial and technology shares lost at least 2 percent to lead declines among 10 S&P 500 main industries. American Express Co. (NYSE: AXP) and Microsoft Corp. (Nasdaq: MSFT) sank more than 2.3 percent. Southwest Airlines Co. (NYSE: LUV) tumbled 3.5 percent amid concern surging oil prices will boost fuel costs. D.R. Horton Inc. (NYSE: DHI) fell 3.8 percent as a report showed residential real estate prices increased in June at a slower pace.
The benchmark gauge fell 0.4 percent Tuesday, reversing an early gain of as much as 0.4 percent after Secretary of State John Kerry said the U.S. will hold Syria’s government accountable for using chemical weapons, fanning concern unrest may disrupt Middle East oil supplies. Crude rose to an 18-month high Tuesday.
The U.S., France and Britain stepped closer Tuesday to a military strike against Syria, laying the legal groundwork to justify action. Defense Secretary Chuck Hagel told the BBC that the U.S. has “assets in place” and forces are “ready to go.”
The introduction of troops isn’t being considered, nor is imposition of a no-fly zone over Syria, according to a U.S. official who asked for anonymity to discuss internal deliberations.
Growing speculation the Federal Reserve will reduce its monthly bond buying has also weighed on equities in recent weeks. Minutes of the central bank’s July meeting released Aug. 21 showed policymakers supported stimulus cuts this year if the economy improves.
Investors are also watching the political wrangling over the approaching limit on federal spending. The U.S. government is expected to exhaust its ability to borrow funds in mid- October, when it will hit the statutory debt limit, according to an estimate from the Treasury Department in a letter to lawmakers released yesterday.
Treasury Secretary Jacob Lew reiterated Tuesday that the Obama administration won’t negotiate over the debt limit, saying he thinks lawmakers understand the need to preserve the U.S.’s “rock-solid” pledge to meet its commitments.
Trading in U.S. exchanges is heading for the second-slowest month in at least five years, according to data compiled by Bloomberg. An average of about 5.5 billion shares changed hands each day this month. That’s about 60 million shares more than last August. About 6.2 billion shares traded today, in line with the three month average.
Airlines dropped as West Texas Intermediate crude rose to the highest level since February 2012 amid the tension in Syria. The Bloomberg U.S. Airlines Index tumbled 5.1 percent to the lowest since June, as all 10 members retreated.
Southwest dropped 3.5 percent to $12.80. United Continental Holdings Inc. (NYSE: UAL) plunged 7.2 percent to $27.71 and Delta Air Lines Inc. (NYSE: DAL) slumped 5.7 percent to $19.11.
Residential real estate prices increased in June at a slower pace, the S&P Case-Shiller index showed Tuesday. Data last week revealed a larger-than-forecast drop in sales of new homes in July. D.R. Horton dropped 3.8 percent to $17.99, the lowest in almost 13 months, while PulteGroup Inc. (NYSE: PHM) slid 3.5 percent to $15.59.
Best Buy Co. (NYSE: BBY) lost 2.2 percent to $35.02. Richard Schulze, the electronics retailer’s founder and largest shareholder, said he plans to sell an undisclosed amount of its stock to diversify his assets and raise money.
DSW Inc. (NYSE: DSW) jumped 7.9 percent to a record $87.75. The shoe retailer reported second-quarter profit excluding some items of 97 cents a share, beating the average estimate of 79 cents from analysts in a Bloomberg survey.
— Bloomberg contributed to this report.