U.S. stocks turned sharply lower this morning on a Bloomberg News report that Russian President Vladimir Putin has pledged to assist Syria if it was attacked.
The Dow Jones industrial average, which started the session higher on the back of weaker-than-expected U.S. August jobs figures, was down by as much as 148 points in early trading but has since retraced some of those losses.
European stocks also moved lower on the report, and Canada's stock market is also trading in the red, although losses have been more modest amid a rally in the gold sector.
Speaking at the Group of 20 summit, Mr. Putin said a chemical attack in Syria was "provocation" and Russia is already aiding Syria with arms shipments, Bloomberg reported.
President Barack Obama says he will address Americans about Syria on Tuesday while he seeks public support and congressional authority for military action against the regime of Syrian President Bashar Assad as punishment for a chemical attack against civilians in suburban Damascus last month.
At 1042 a.m. (ET), the S&P 500 index was down 2 points, or 0.1 per cent, at 1,652.98; the Dow was down 58 points, or 0.4 per cent, at 14,879; and the S&P/TSX composite index was down 27 points, or 0.2 per cent, at 12,820.
Initially, U.S. stocks opened higher after the release of mildly weaker-than-expected jobs figures for August. The data is an important indicator of when the Federal Reserve is likely to start the tapering of its massive monthly bond-buying program, and the reading suggested little urgency to start the process. Gold immediately rallied on the jobs figure on bets the Fed will delay tapering. Gold futures in New York are currently up 1 per cent, and the materials sector of the TSX is up 1.4 per cent.
Many, but not all, market players think the Fed will announce a mild scaling back of the quantitative easing measures at its Sept. 17-18 policy meeting. A strong jobs report this morning would have been perceived as increasing the odds of tapering action this month, but the soft number has left some thinking the Fed may hold off until October or later.
Moments before the jobs figures, Chicago Fed President Charles Evans provided his latest outlook on the Fed's actions, predicting tapering will begin "later this year," depending on economic data. He also predicted the Fed will hike interest rates by mid to late 2015.
Canada also released its August jobs numbers this morning. They came in stronger than expected and sparked an immediate rise in the loonie to 96.16 per U.S. dollar, from 95.61 just prior to the release of the data.