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(This undated image taken from amateur video footage provided by the Media Office Of Moadamiyeh purports to show medics assisting a man lying on a bed who appears to be shaking uncontrollably as a UN inspection team visits a makeshift hospital in Moadamiyeh, a suburb of the Syrian capital of Damascus. Doctors Without Borders said 355 people were killed in an artillery barrage by regime forces on Wednesday, Aug. 21, 2013 that included the use of toxic gas. The media office of Moadamiyeh is a loosely organized Anti-Assad activist group based in Moadamieyh which posts video and still images of violence and other developments from the region. The Associated Press) cannot absolutely certify the content, date, location or authenticity of this image. (AP Photo/Media Office Of Moadamiyeh)
Wall Street: Mounting tensions with Syria sink stocks
First Published Aug 27 2013 09:00 am • Last Updated Aug 27 2013 03:57 pm

NEW YORK • Fears of an escalating conflict in Syria rippled across financial markets on Tuesday, sinking stocks, lifting gold and pushing the price of oil to the highest in a year and a half.

The increasing possibility of U.S. military strikes raised worries on Wall Street that energy trade in the region could be disrupted, raising fuel costs for consumers and business.

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"If Syria becomes drawn out and becomes a long-term issue, it’s going to show up in things like gas prices," said Chris Costanzo, investment officer with Tanglewood Wealth Management.

The Dow Jones industrial average fell 170.33 points, or 1.1 percent, to 14,776.13, the lowest in two months.

The Standard & Poor’s 500 index lost 26.30 points, or 1.6 percent, to 1,630.48 and the Nasdaq composite fell 79.05 points, or 2.2 percent, to 3,578.52.

"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.

The sell-off in U.S. stocks was broad. All 10 industry sectors in the S&P 500 index were in the red, and only 31 of the index’s 500 stocks rose. Utilities and other high dividend-paying stocks mostly escaped the selling.

The impact wasn’t just in stocks. Gold prices advanced and government bond prices jumped because traders see those investments holding their value better in times of uncertainty. Gold rose $27, or 2 percent, to $1,420 an ounce while the yield on the benchmark U.S. 10-year Treasury note fell to 2.71 percent from 2.79 percent.

While Syria itself has little oil, 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 surged $3.09, or 2.9 percent, to close at $109.01 a barrel, the highest closing price since February 2012.

"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.


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Energy prices dragged down the airline industry on concerns that higher oil prices could lead to higher fuel costs. United Continental Holdings, the world’s largest airline by revenue, dropped $2.15, or 7.2 percent, to $27.71 and Delta Air Lines lost $1.16, or 5.7 percent, to $19.11.

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.

The average price for a gallon of gasoline remained unchanged in the U.S. at $3.54 a gallon. Prices have held steady over the past week, and are down 9 cents from a month ago.

In corporate news, discount shoe seller DSW jumped $6.43, or 7.9 percent, to $87.75 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 fell 18 cents, or 1.3 percent, to $13.17 after the company’s biggest investor, Bill Ackman, said he plans to sell his entire stake in the discount department store chain.

The tensions with Syria overshadowed two positive reports on the economy.

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.

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AP Business Writer Pan Pylas contributed from London.



Copyright 2014 The Salt Lake Tribune. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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