Stocks Gain as Markets Temper Syria War Uncertainties

NEW YORK ( TheStreet) -- Stocks rose Wednesday as concern eased about the potential magnitude of international military action against Syria.

The S&P 500 gained 0.27% to close at 1,634.96 while the Dow Jones Industrial Average also added 0.33% to 14,824.51. The Nasdaq jumped 0.41% to 3,593.35.

"Our view is that Syria is likely to play out similar to Libya (anger, fighting, but limited disruption to markets in both time and size)," Peter Tchir, founder of the New York-based hedge-fund adviser TF Market Advisors, wrote in a note.

Paul Donovan, a London-based global economist at UBS, also downplayed some of the worries about the conflict with Syria.

"Syria could impact the global economy through 1) direct impact on oil supply, 2) contagion creating instability in other economies in the region, 3) an increase in global terrorism risk," Donovan said in a report. "Of these, only the second option is a threat, and it seems a fairly muted economic threat."

Both gold and oil futures were calmer Wednesday after surging the prior session amid the departure to safety assets and concerns that escalating tensions with Syria could lead to oil supply disruptions. December gold futures lost $1.40 to settle at $1,418.80 an ounce, remaining at multi-month highs. October crude oil futures jumped $1.09, at one point jumping to two-year highs, to close at $110.10 a barrel.

Energy stocks lead the S&P higher, rising 1.8% after oil prices reached two-year highs. Marathon Oil ( MRO) was the second largest percentage gainer in the S&P with shares jumping 3.7% to $34.60.

Marathon also announced that CEO Lee Tillman will be presenting at three investor conferences in September. This follows the company's announcement Tuesday that CFO Janet Clark will be retiring on Oct. 1 and that its board elected John Sult to succeed Clark effective Sept. 3.

Goodyear Tire & Rubber ( CVX) was the top gainer on the S&P, climbing 4.3% to $19.82, after the tire manufacturer announced a quarterly dividend of 5.875% on its preferred stock.

Joy Global ( JOY) was the worst performer on the S&P after the mining equipment maker forecast a drop in sales. Shares lost 4.7% to $48.89

Airline stocks were weak amid concerns about rising fuel prices following the oil spikes. American Airlines ( AAMRQ) declined 1.93% to $3.05 and US Airways ( LCC) was off 0.8% to $15.34.

Paul Christopher, the Greater St. Louis area-based chief international strategist at Wells Fargo Advisors, said he remains positive on the domestic economy and the U.S. stock market even if questions about the U.S. response to Syria and other uncertainties produce some additional price weakness in the next month or two. Christopher continues to hold a 1,650 to 1,700 year-end target range for the S&P 500 and a 2.75% target on the U.S. 10-year Treasury yield, according to a Wells Fargo report published Tuesday evening.

Markets also shrugged off a decline in pending home sales in July, as reported by the National Association of Realtors. The NAR's pending home sales index fell 1.3% for last month after declining 0.4% the prior month. Economists were expecting a fall of 0.5%.

"There has been some softness in the recent U.S. housing data, but we would ascribe this as being more a function of supply problems than of a lack of demand (house prices continue to rise too, which is what the consumer cares about)," Donovan said in a note.

The benchmark 10-year Treasury was losing 18/32, raising the yield to 2.780%.

-- Written by Andrea Tse and Joe Deaux in New York

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