At the Open: War and Policy Uncertainty Tip Stocks Lower; Apache Surges 8% on Egypt Sale

Stocks have ticked lower this morning as uncertainty surrounding an attack on Syria grew and U.S.economic data hinted at a sluggish but still recovering economy.

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The Dow Jones Industrials have fallen 0.2% to 14,814, while the S&P 500 has dropped 0.1% to 1,635.82. The Nasdaq Composite has dropped 0.4% to 3,605.75.

First up: Syria. The Brits have decided not to get involved; the French have decided they will support a strike. Deutsche Bank’s Jim Reid sums up where we now stand:

Newswires suggest that a US strike could occur as soon as UN inspectors leave the country on Saturday. Meanwhile, Russia is sending two warships to the east Mediterranean, Interfax news agency said on Thursday, but Moscow said it was part of a normal rotation and denied this meant it was beefing up its naval force there.

Ahead of this, the White House will release a declassified intelligence report today which details the evidence that the Syrian government used chemical weapons against civilians…US security sources and sources close to allied governments say evidence suggests that the initial decision to use chemical weapons may have been made by a field commander rather than in an order from the highest level of the Syrian government. A critical piece of the intelligence is an intercepted telephone call between Syrian military officials, one of whom seems to suggest that the chemical weapons attack was more devastating than was intended…

Economic data, meanwhile, continues to hint at a sluggish economic recovery in the U.S. Jefferies’ Thomas Simons explains:

The August MNI-Chicago Business Barometer improved modestly to 53.0 from 52.3 in July.  The index came in right on expectations as the BBG consensus call was for an improvement to 53.0. The range of estimates was 51.0 to 55.0.

A variety of recent economic indicators have suggested that the overall economy lost momentum in the first half of the year.  The manufacturing sector specifically had been treading water before this loss of overall momentum.  Some recent manufacturing indicators (including this report) have shown some signs of breaking out of the doldrums, but the improvement has been erratic.  We are optimistic about a recovery in the manufacturing sector in the second half of the year, but the path to growth will not be free of bumps.

When forced with a choice between the chance of war and monetary policy, Barclays Michael Gavin tells investors that their focus should be on monetary policy. In a note today, he writes: