Syria worries stagger markets
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.
“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 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 10-year Treasury note fell to 2.71 percent from 2.79 percent.
While Syria has little oil, traders feared an intervention in the country 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.
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 United States at $3.54 a gallon. Prices have held steady during the past week, and are down 9 cents from a month ago.