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 rising 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, its 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 & Poors 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 indexs 500 stocks rose. Utilities and other high dividend-paying stocks mostly escaped the selling.
The impact wasnt 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.