US stocks sharply declined amid escalating tension in Syria

Stocks dropped, with blue chip stocks falling to two-month lows, as investors fretted over escalating tensions in Syria. While much of the attention among traders Tuesday was focused on Syria, the sell-off extends a decline from recent weeks blamed on expectations that the Federal Reserve will decide in September to scale back its economic stimulus efforts.

The Dow Jones Industrial Average sank 170.33 points, or 1.1%, to 14776.13. The Dow closed at the lowest level since June 25. The S&P 500-stock index fell 26.30 points, or 1.6%, to 1630.48 and the Nasdaq Composite Index slid 79.05 points, or 2.2%, to 3578.52.

The S&P 500 has lost 4.6% from its all-time closing high of 1709.67 on Aug. 2, but is still up 14% so far this year.

“People are using Syria as an excuse to sell today,” said Uri Landesman, president of New York-based hedge fund Platinum Partners. “The prospects of the U.S. [using military action] is not making investors particularly sanguine.”

The Conference Boards consumer confidence index rose to 81.5 in August from 80.1 in July, compared with expectations of a slight decline to 79.1.

European markets retreated, with the Stoxx Europe 600 losing 1.8%, as worries about Syria and the U.S. debt ceiling overshadowed upbeat data out of Germany. The Ifo institutes business confidence index for Germany rose more than expected to 107.5 in August from 106.2 in July.

In corporate news, Financials and industrials led all 10 of the S&P 500 sectors lower. Within the Dow, Bank of America declined 2.6% and Microsoft fell 2.6% to pace declines in 28 of 30 components.

J.C. Penney lost 1.4%. Pershing Square Capital Management, run by Bill Ackman, disclosed late Monday that it had unloaded its entire stake of 39 million shares in the retailer. Mr. Ackman had resigned from the companys board earlier this month after he failed to push through a change in the companys management.

Tiffany declined 1% as the high-end jeweler reported fiscal second-quarter earnings that topped expectations and raised its full-year outlook, but revenue missed forecasts.