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A day after US markets were closed for the US Labour Day holiday, shares had begun brightly on Wall Street, with the Dow advancing more than 100 points in the morning session on the back of some positive economic data and with the prospect of military action against Syria appearing to be on the wane after President Obama’s inability to gather support from lawmakers over the weekend.
The direction of the stock market quickly reversed, however, as Speaker of the House John Boehner pledged his support for President Obama’s bid to launch military action against Syria in response to a chemical attack on civilians. The US has the means to give a warning that ‘this type of behavior is not going to be tolerated,’ said Mr Boehner. ‘This is something that the United States as a country needs to do.’
By early afternoon in New York, the Dow was trading down 11 points or 0.08% at 14,798. The S&P 500 remained in positive territory, up 0.21% at 1636.4, after having been up more than 1% at one point earlier in the day.
The drop means the Dow continues its poor performance after a dreadful showing in August, when it recorded its worst monthly performance since May 2012.
Data earlier in the day had shown signs of life in the manufacturing sector, with the ISM manufacturing index rising to 55.7 in August, from July’s reading of 55.4, with notable strength in the new orders component. Construction spending advanced 0.6% in July, a big bounce from June’s upwardly-revised 0.0%.
The strength of today’s data swings the pendulum back in the favour of hawks at the Fed pushing for tapering at this month’s FOMC meeting, which has helped the dollar to strengthen against sterling, the euro and the Swiss franc today.