Benchmarks settled in the red zone following reports that Russia has increased forces along its border with Ukraine. Investors' apprehensions about a rate hike following strong economic data also weighed on markets. Dow's three-digit decline eroded all of Monday's gains, while fellow benchmarks also lost heavily.
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The Dow Jones Industrial Average (DJI) declined 0.8%, or 139.81 points, to close at 16,429.47. The Standard & Poor 500 (S&P 500) decreased 1% to close at 1,920.21. The tech-laden Nasdaq Composite Index closed at 4,352.84; declining 0.7%. The fear-gauge CBOE Volatility Index (VIX) rose 11.6% to settle at 16.87. A total of 6.2 billion shares were traded yesterday, lower than last five day's average of 6.7 billion. Decliners outpaced advancing stocks on the NYSE. For 69% stocks that declined, 28% advanced.
Markets were dragged down on Tuesday following reports that Russia is preparing to act against the Ukrainian army who have recovered some parts of eastern Ukraine from the pro-Russian separatists. According to Western officials, Russia has increased the number of troops along the Ukrainian border from 19,000 to 21,000 over the past few weeks. These include infantry, armor, artillery and air defense forces.
Russia has been accused by the Western powers of building up its troops and arming separatist forces along the eastern region of Ukraine. However, Moscow has denied such allegations. Investors were unnerved by these escalating political tensions.
On the economic front, the Institute for Supply Management reported ISM Services Index had increased to 58.7 in July, beating the consensus estimate of 56. It was also 2.7% higher than the June reading of 56.
According to U.S. Census Bureau, new orders for manufactured goods were up 1.1% in June after declining 0.6% in May. This was the highest growth since 1992. Both these reports lifted the markets in the initial hours. However, gains were eroded as investors grew apprehensive about the prospect of a rate hike.
Separately, shares of Target Corp. ( TGT ) declined 4.4% after lowering its second quarter adjusted earnings per share guidance to 78 cents. The retailer was earlier expecting earnings to come in between 85 cents and $1. Weak sales growth in Canada and America may reduce the company's second quarter earnings.
Coach, Inc. ( COH ) posted fourth-quarter fiscal 2014 earnings of 59 cents a share, beating the Zacks Consensus Estimate of 54 cents on higher international sales. The company reported fourth quarter net sales of $1,136.2 million, surpassing the Zacks Consensus Estimate of $1,099 million. Coach's shares gained 4.3%.
Shares of Toyota Motor Corporation ( TM ) rose 0.8% after announcing first-quarter fiscal 2015 earnings per ADR of $3.64, surpassing the Zacks Consensus Estimate of $3.07. Earnings were also higher than the year-ago quarter's $3.58.
Pioneer Natural Resources Co.'s ( PXD ) shares dropped 5.6% after reporting second quarter revenues of $953.0 million, missing the Zacks Consensus Estimate of $960.0 million. Revenues in the second quarter decreased 17.8% from the year-ago level of $1,159.0 million.
The Energy Select Sector SPDR (XLE) dropped 2.2% due to dismal results from Pioneer Natural Resources and a drop in oil prices , which was a result of lower demand. The energy sector was the biggest loser among the S&P 500 sectors yesterday. Key energy stocks from the sector such as Exxon Mobil Corporation ( XOM ), Schlumberger Limited ( SLB ), Chesapeake Energy Corporation ( CHK ) and Halliburton Company ( HAL ) decreased 1.9%, 2.4%, 2.9% and 3.4%, respectively.
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