Syria concerns dull market's rally
NEW YORK — The stock market rose modestly on Tuesday as renewed worries about a U.S.-led attack on Syria dampened an early rally.
Stocks surged in the opening minutes of trading as investors believed that a U.S. attack on Syria wasn't imminent. President Obama announced during the weekend that he would seek congressional approval for a strike.
But the early rally faded after the top Republican in Congress said he would support Obama's call for the country to take action. In the late morning, House Speaker John Boehner said the use of chemical weapons must be responded to.
“Key Republicans seem to agree with Obama on Syria,” said J.J. Kinahan, chief derivatives strategist for TD Ameritrade. “It puts us in a difficult situation as to what might happen from here.”
The Dow Jones industrial average closed up 23.65 points, or 0.2 percent, to 14,833.96. The index had climbed as much as 123 points in early trading.
The Dow was held back by Microsoft and Verizon, both of which slumped after announcing deals.
The Standard & Poor's 500 index gained 6.80 points, or 0.4 percent, to 1,639.77. The Nasdaq composite climbed 22.74 points, or 0.6 percent, to 3,612.
The stock market got an early boost from a report showing that manufacturing expanded last month at the fastest pace since June 2011. The report was better than economists had expected, according to estimates compiled by data provider FactSet.
In corporate news, CBS surged $2.40, or 2.7 percent, to $53.50 after the broadcaster and Time Warner Cable reached an agreement that ended a blackout of CBS and CBS-owned channels such as Showtime.
Other corporate news was disappointing. Microsoft fell $1.52, or 4.6 percent, to $31.88 when it announced it would acquire Nokia's smartphone business and a portfolio of patents and services. Microsoft is trying to capture a slice of the lucrative mobile computing market that is dominated by Apple and Google, and investors are concerned that Microsoft won't succeed.
Verizon fell $1.37, or 2.9 percent, to $46.01. The company agreed to pay $130 billion for Vodafone's stake in Verizon Wireless.
After a tough August, stocks may struggle to rally in September because of a string of events that could shake investors, said Randy Frederick, managing director of active trading and derivatives at the Schwab Center for Financial Research.
The S&P 500 logged its worst performance since May 2012 last month as investors fretted about when the Federal Reserve will cut its economic stimulus. The Fed's next meeting, which starts Sept. 17, is when many on Wall Street think the central bank will begin winding down its bond-buying program.
Lawmakers in Washington may throw investors a curve ball.
To keep the government running, Congress needs to pass a short-term spending bill before the fiscal year starts Oct. 1. Then there's the government's $16.7 trillion borrowing limit. Treasury Secretary Jacob Lew warned that, unless it is raised soon, the government would lose the ability to pay all of its bills by the middle of October.
Political wrangling in Washington shook financial markets in August 2011, when lawmakers fought over raising the debt ceiling. That led the rating agency Standard & Poor's to strip the United States of its triple-A credit rating.
“All these catalysts out there ... are still there,” Frederick said. “There's just not enough upside catalysts, and there's plenty of downside catalysts.”