Market Wrap: U.S. Stocks Move Lower on Tension Overseas

UKRAINE-RUSSIA-CRISIS-POLITICS-MILITARY
Anatoli Stepanov/AFP/Getty ImagesA serviceman postures on an APC in the Donetsk region of Ukraine. The current fighting, and the potential for worse to come, is spooking investors worldwide.
By KEN SWEET

NEW YORK -- The stock market pulled back slightly Tuesday, following two days of gains, as investors focused on the damage that ongoing geopolitical tensions were causing the global economy.

Energy stocks were among the biggest decliners, dragged down by lower oil prices.

U.S. stock indexes opened modestly higher but turned lower at mid-morning and stayed there for the rest of the day. Investors took a cue from Europe, where Germany's benchmark index fell more than 1 percent and France's CAC 40 fell nearly 1 percent.

An indicator of German investor confidence dropped to its lowest level in 20 months. Investors worried that the Ukraine crisis will start dragging down the German economy, Europe's largest. The continent is much more exposed to Russia than the U.S. is. Europe also gets most of its natural gas from Russia.

The Ukraine situation has dragged the German stock market down more than 8 percent from its early July peak.

"The Ukraine-Russia situation may be at a standstill politically, but it is weighing on the German economy and, more broadly, the eurozone," said Sean Lynch, a managing director at Wells Fargo Private Bank.

It has been a quiet week for investors overall, with little economic data or company earnings to work through. Absent hard data to pull the market higher, the current trend for the market is down, Lynch said.

Fears of a Russian invasion of Ukraine have faded in recent days, but worries about conflicts around the globe are likely to keep investors on edge in the coming weeks.

A convoy of more than 260 Russian trucks, reportedly packed with supplies, moved toward Russia's border with Ukraine on Tuesday, but Kiev said the goods would only be allowed to cross if they were inspected by the International Red Cross. Ukraine is fearful that Russia could use the move as a cover for sending troops into the separatist-held territory.

Investors are also watching political machinations and violence unfold in oil-rich Iraq. On Tuesday, that nation's embattled prime minister, Nouri al-Maliki, tried to stay in power as Iraqi politicians and the international community rallied behind a political competitor.

The Dow Jones industrial average (^DJI) lost 9.44 points, or 0.1 percent, to 16,560.54. The Standard & Poor's 500 index (^GPSC) fell 3.17 points, or 0.2 percent, to 1,933.75 and the Nasdaq composite (^IXIC) fell 12.08 points, or 0.3 percent, to 4,389.25.

Energy stocks in the S&P 500 fell 0.7 percent, the most of the 10 sectors in the index. Kinder Morgan declined nearly 2 percent after rising 9 percent the day before on news it would combine several companies under its control. Anadarko Petroleum (APC) and Diamond Offshore Drilling (DO) fell more than 2 percent.

Energy stocks have declined noticeably in the last month, due largely to falling oil and natural gas prices. Brent crude, which is traded in the U.K. and is considered a broader gauge of the international oil market, is trading at a nine-month low. U.S. crude is trading at a seven-month low.

The price of U.S. crude oil slipped 71 cents to $97.37 a barrel Tuesday. That followed three days of increases over concerns about the reliability of Iraqi oil production.

There were other signs that investors were in a "risk-off" mode. The Russell 2000 index, which is made up primarily of smaller and riskier companies, fell 0.8 percent, much more than the rest of the market.

In individual stocks, Kate Spade (KATE) plunged $9.87, or 25 percent, to $29 after executives for the handbag company warned that sales growth could slow this year and profit margins were being hit. The comments came after Kate Spade reported a better-than-expected quarterly profit.

The yield on the 10-year Treasury note rose to 2.45 percent. In metals trading, gold rose 10 cents to $1,310.60 an ounce, silver fell 19 cents to $19.51 an ounce and copper fell two cents to $3.15 a pound.

What to Watch Wednesday:
  • The Commerce Department releases retail sales data for July at 8:30 a.m. Eastern time, and business inventories for June at 10 a.m.
These major companies are scheduled to release quarterly financial statements:
  • Cisco Systems (CSCO)
  • Deere & Co. (DE)
  • Macy's (M)
  • Pinnacle Foods (PF)
  • SeaWorld Entertainment (SEAS)

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7 Comments

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Master

Come up with something new for a change. Tension overseas is getting old and
you say that every time the market dips. Did all the investors call you up this morning
and say "theres tension overseas so I'm going sell some stuff". How do you know
that? Fair question.

August 12 2014 at 10:54 PM Report abuse -1 rate up rate down Reply
fred

So when IS the house of cards built on sand going to fall?

August 12 2014 at 9:33 PM Report abuse -1 rate up rate down Reply
Iselin007

Now we know, the stock market makes excuses for pull backs rather then admit it's so over inflated.

August 12 2014 at 9:32 PM Report abuse -1 rate up rate down Reply
1 reply to Iselin007's comment
trew.liberal1

The stock market neither makes excuses or admissions.

By the way, how many voices do you hear?

August 12 2014 at 10:14 PM Report abuse -1 rate up rate down Reply
chuckles

Yesterday the market "surged" +16 points, today it "pulled back slightly" -9.4
on tensions overseas. There's been tension overseas for years. Might as well say the market slumped in sympathy with the death of Robin Williams. Or there was a full moon last night. What a joke this site is.

August 12 2014 at 8:54 PM Report abuse -1 rate up rate down Reply
thefacts22

Many of the "tensions" could have been predicted and plans should have been ready,there is a possibility that Ukrania will be invaded sometime in the future by Russia.Irak is mess,and a victory was turned into a catastrophe ,by running out of there like rabbits.Arab Spring was a fraud and a flop,thank god Egypt kicked out Morsi against the opinion of our Oba the smart.USA should keep Kerry out of Gaza,and much more

August 12 2014 at 7:47 PM Report abuse -1 rate up rate down Reply
Iselin007

You must have writer's block because this story is too familiar. Get used to the Global violence it's not going away. Might as well tie the stock market to a roll of the dice!

August 12 2014 at 7:06 PM Report abuse -1 rate up rate down Reply