By Dow Jones Business News,
August 05, 2014, 04:09:00 PM EDT
By Anora Mahmudova and Barbara Kollmeyer, MarketWatch
Coach jumps, Target, Motorola Solutions fall
NEW YORK (MarketWatch) -- U.S. stocks closed sharply lower on Tuesday following reports that Russia is building up its
military presence on the border with Ukraine.
Fears that the Federal Reserve might raise interest rates sooner than expected in the wake of fresh signs that the
economy is gaining strength lingered in the background.
The S&P 500 (SPX) closed 18.78 points, or 1%, lower at 1,920.21. The Dow Jones Industrial Average (DJI) dropped 139.81
points, or 0.8%, to 16,429.47. The Nasdaq Composite (RIXF) fell 31.05 points, or 0.7%, to 4,352.84.
Read the recaps of MarketWatch's live blog of today's stock-market action.
The Financial Times reported that Russia has dramatically increased the number of troops and vehicles positioned on
its eastern border with Ukraine during the past few days, reviving fears among investors that the conflict could
escalate. Separately, Russian President Vladimir Putin ordered his government to prepare retaliatory measures against
U.S. and European economic sanctions imposed on Russia.
Nichoalas Colas, market strategists at ConvergEx Group, a global brokerage company based in New York, said it was
eerie to see investors start worrying about a possible full-blown war between Ukraine and Russia on the 100th
anniversary of the start of the World War I.
"Over the past several months markets had shrugged off such a possibility and discounted a potential for a real war.
The news that Russia might have its troops inside Ukraine instead of waging a proxy war caught a lot of investors
flatfooted," Colas said.
"If this is the beginning of a correction, we expect it to be a slow-motion one. People are just not making sudden
moves," he added.
Also read: What's so bad about higher interest rates?
Tuesday's economic news showed U.S. service-sector companies expanded in July at the faster pace in nine years,
according to survey of senior executives. Meanwhile, factory orders in June climbed to the highest level on record and
topped estimates compiled by MarketWatch.
Among individual companies, shares in Coach Inc. ( COH ) rallied 4.3% after better-than-expected earnings.
Target Corp. ( TGT ) shares fell 4.4% after the retailer lowered its outlook.
Walgreen Co.( WAG ) fell 4.2% on reports of the drugstore chain's intent to keep its headquarters in the U.S. after it
takes over British pharmacy chain Alliance Boots, rather than move its domicile abroad to lower its tax bill.
Motorola Solutions Inc. ( MSI ) fell 4.2% after the networking-systems company reported a drop in second-quarter sales
and guidance for the current period came in weaker than expected. See today's notable Movers & Shakers.
Groupon, Inc ( GRPN ) shares plunged 13% in after-hours session after reporting results. Live blog: Groupon's second-
quarter earnings report.
In other markets, the Nikkei 225 index fell to its weakest closing level in more than a week, after the HSBC China
services purchasing managers index came in at the lowest reading in the nearly nine-year history of the index. China is
a big export market for Japan manufacturers. Other Asian markets were generally lower as well.
European stocks closed higher. September futures contracts for both crude oil (CLU4) were lower and futures for gold
(GCU4) rose 0.1% after the selling took hold in equity markets. The dollar (DXY) held steady.
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