Europe’s recovering economy depends on Russian natural gas for heat and power, and winter is months away. Germany imports almost all of its supply from Russia, and France also meets a large part of its energy needs from Russia.
“The European economy is much more exposed to Russia than to the United States,” said Randy Frederick, managing director of Charles Schwab.
Tuesday’s losses add to what have been a tough few weeks for the market. The sp. 500 fell 2.7% last week, its worst five-day performance since June 2012. While the market rallied on Monday, Tuesday’s losses wiped out those gains, leaving the Dow Jones and S.&P . 500 less for the week.
Investors received two positive reports on the US economy.
The Institute for Supply Management said the country’s service sector grew in July at the fastest pace in more than eight years, the latest sign of an economy picking up steam in the second half. Its index came in at 58.7, down from the 56.5 that economists had predicted. Any number above 50 indicates expansion. The survey covers companies that employ 90% of the workforce, including retail, construction, healthcare and financial services companies.
Meanwhile, June factory orders also rose more than expected, the Commerce Department said, rising 1.1% from the 0.6% increase economists had forecast. The increase was driven by rising demand for aircraft, industrial machinery, and computers and electronics.
Among individual stocks, Target fell $2.67, or 4.4%, to $58.03 after the company lowered its second-quarter profit forecast. Target said last year’s massive data breach cost far more than expected. Consumers remain cautious about shopping at the store, Target said.
In the bond market, the yield on the 10-year Treasury bill rose to 2.49%, from 2.48% on Monday evening, while its price fell from 1/32 to 100 3/32.