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While you were sleeping: Iraq concern weighs on stocks

While you were sleeping: Iraq concern weighs on stocks

June 25 (BusinessDesk) – Wall Street declined as Iraq’s violence escalated into cross-border hostilities with Syria, bolstering concern about the stability of the Middle East and overshadowing better-than-expected data on US consumer confidence and new home sales.

The Wall Street Journal reported that Syrian warplanes struck targets in western Iraq, killing at least 50 people.

In the final hour of trading in New York, the Dow Jones Industrial Average shed 0.48 percent, while the Standard & Poor’s 500 Index slipped 0.10 percent. The Nasdaq Composite Index rose 0.31 percent.

Declines in shares of Exxon Mobil, down 1.2 percent, and those of JPMorgan Chase, down 1.1 percent, led the Dow lower.

“It’s the situation with any kind of geopolitical scenario over in the Middle East,” Stephen Carl, principal and head equity trader at New York-based Williams Capital Group, told Bloomberg News. “It’s tenuous, you don’t know which way it’s going to go, and any kind of abrupt action is going to be a trigger.”

The latest US economic data underpinned the view of a sustained recovery.

New home sales jumped 18.6 percent to a seasonally adjusted annual rate of 504,000 units in May, according to Commerce Department data. Separately, the Conference Board’s consumer confidence index climbed to 85.2 in June, the highest reading since January 2008, and up from 82.2 in May.

“This is convincing evidence that the economy continues to expand," Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ in New York, told Reuters. "It takes a lot of confidence to buy the biggest of big ticket items consumers ever face, buying a new home."

To be sure, the S&P/Case-Shiller index of property values rose 10.8 percent from April 2013, the smallest 12-month increase in more than a year.

Shares of Vertex Pharmaceuticals soared, last up 40.5 percent, after the biotech company said trials showed promising results in improving lung function for people with cystic fibrosis.

"The combination of lumacaftor and ivacaftor is the first regimen designed to address the underlying cause of CF for people with the most common form of the disease, and based on these data, we plan to move as fast as possible to submit applications for approval of this combination regimen in countries around the world," Jeffrey Chodakewitz, chief medical officer at Vertex, said in a statement.

In Europe, the Stoxx 600 Index finished the day with a 0.2 percent decline from the previous close, as did the UK’s FTSE 100. France’s CAC 40 eked out a 0.06 percent gain, while Germany’s DAX rose 0.2 percent.

In Germany, the Ifo institute’s business climate index slid to 109.7 in June from 110.4 in May.

The British pound fell after Bank of England Governor Mark Carney suggested interest rates might not rise as soon as thought by pointing to the fact that wages were not rising as quickly as the central bank had anticipated. It was Carney himself who earlier this month sparked expectations of a potential rate increase this year.

"An early rate hike may not be a done deal as yet," Valentin Marinov, head of G10 currency strategy at Citi, told Reuters.


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