U.S. stocks fell Tuesday, with the Standard & Poor's 500 index dropping the most since June 20, as growing tension over possible military action in Syria overshadowed a report showing consumer confidence unexpectedly rose in August.
The Dow Jones industrial average closed down 170.33, or 1.14%, at 14,776.13; the S&P 500 fell 26.30, or 1.59%, ending at 1,630.48; and the Nasdaq composite closed down 79.05, or 2.16%, at 3,578.52. All numbers are preliminary.
“Everybody's waiting to see what's going to happen,” Randy Bateman, who oversees $15 billion as chief investment officer of Huntington Asset Advisors, said by phone. “Is this going to escalate? Energy prices, if they rise a whole lot, could that mitigate all the strength we've been seeing lately in the economy? If we've got housing prices that start to rise at the same time we have food and fuel increasing, we could see inflation start to rise and that could impact Fed policy.”
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 oil 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, moving forces into place and rounding up allies in the region. 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 last week showed policy makers supported stimulus cuts this year if the economy improves.
Data on Tuesday showed consumer confidence unexpectedly increased in August as Americans grew more optimistic about the outlook for the economy.