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Markets snapped its two-day winning rally on Tuesday as concerns over Russia-Ukraine tension dented investor sentiment. Discouraging Germany’s investor confidence data, declining energy stocks and tensions in Iraq also affected yesterday’s session marked by low-volumes. The day’s loss dragged the blue-chip index into the red zone for the year.

For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article

The Dow Jones Industrial Average (DJI) declined 0.1%, to close at 16,560.54. The Standard & Poor 500 (S&P 500) decreased 0.2% to close at 1,933.75. The tech-laden Nasdaq Composite Index closed at 4,389.25; declining 0.3%. The fear-gauge CBOE Volatility Index (VIX) declined 0.7% to settle at 14.13. A total of 4.3 billion shares were traded on Tuesday, lower than the five-day average of 6 billion. Decliners outpaced advancing stocks on the NYSE. For 56% stocks that declined, 40% advanced.

Russia started providing humanitarian aid to eastern Ukraine. According to Russian media reports, 280 trucks, carrying humanitarian aid, have left for Ukraine from Moscow. Reportedly, the trucks are carrying 2,000 tonnes of humanitarian aid, including cereals, sugar, baby food, medical equipment and medicine, sleeping bags and generators.

However, Ukraine and Western community remained concerned about the fact that Russia may intervene militarily in Ukraine in the guise of humanitarian aid. Ukraine said it will not allow Russian trucks into their territory. As a result, Russia said aid will be handed over to the International Committee of the Red Cross before entering Ukraine. On Monday, Ukraine’s military spokesman Andriy Lysenko said Russia has built up a force of 45,000 troops along the border of Ukraine.

Geopolitical tensions over Ukraine are starting to weigh on Germany’s economy. The country’s investor confidence index, the ZEW, declined to its lowest level since Dec 2012 in Germany. Some analysts said concerns over Russian sanctions impacted investors as tensions threaten German industries.

Investors’ sentiment was also dented as armed aggression continued in the Islamic State in Iraq and Syria (ISIS). Though the U.S. declined to send combat forces to Iraq, it said that it would provide support related to political, economical and security issues for Iraq’s new prime minister, Haider al-Abadi. On Monday, Iraq’s president appointed Haider al-Abadi as Iraq’s new prime minister after Nouri al-Maliki failed to stop conflict in the country.

Meanwhile, Israel and the Palestinians maintained the 72-hour ceasefire agreement after accepting the Egyptian proposal for the same.

On Tuesday, the price of U.S. crude oil declined 71 cents to $97.37 per barrel after increasing for three consecutive days. This impacted the Energy Select Sector SPDR ETF (XLE) negatively. The sector declined 0.7% yesterday. Key energy stocks from the sector such as Chevron Corporation (CVX - Analyst Report), Schlumberger Limited (SLB - Analyst Report), Chesapeake Energy Corporation (CHK - Analyst Report) and EOG Resources, Inc. (EOG - Analyst Report) declined 0.5%, 1.2%, 2.1% and 1.5%, respectively. Out of 10 S&P 500 sectors, 8 sectors registered losses on Tuesday.

Among the companies, shares of Kate Spade & Company (KATE - Snapshot Report) dropped 25.4% on concerns about lower margins. Despite 30% growth in sales, the company experienced contraction in gross margin, which came in at 58.6% for the quarter, down 3.1% compared to the same period last year. However, shares had gained initially after the company reported second quarter earnings of 5 cents per share, compared to the Zacks Consensus Estimate of loss per share of one cent.

Nuance Communications, Inc. (NUAN - Snapshot Report) posted fiscal third quarter earnings per share of 10 cents, missing the Zacks Consensus Estimate of 13 cents. Shares of Nuance Communications declined 9%.

On the economic front, the Department of Treasury reported that the U.S. experienced a budget deficit of $94.59 billion in July, compared to a surplus of $70.52 billion in June. Although the deficit declined 3.1% from year-ago level of $97.59 billion.

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