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Stocks pull back on Ukraine worries

David Russell (david.russell@optionmonster.com)

Stocks are lower this morning as tensions return to Eastern Europe and as investors prepare for key economic news.

S&P 500 futures are down 0.3 percent but were down more than 0.4 percent earlier in the morning. The decline follows news late yesterday that Russian armored troops had entered Ukraine and were fighting in support of pro-Moscow rebels. It would mark an escalation from the previous situation, when Russia provided only supplies.

The news is hitting European stocks harder, sending Germany, Spain, and Italy down about 1 percent. Asian markets also fell about half a percent overnight. Safe-haven assets like gold, Treasury bonds, and the Japanese yen are higher across the board.

Today's other big catalyst comes at 8:30 a.m. ET, when the Commerce Department in Washington will announce its revised estimate for second-quarter gross domestic product. Initial jobless claims come out at the same time, followed by pending home sales at 10 a.m. ET and natural-gas inventories at 10:30 a.m. ET.

The military events in Ukraine follow a quick rally in the S&P 500, which propelled the index above 2000 for the first time ever. Retailers, homebuilders, and biotechnology have led the charge, according to our reseachLAB market scanner. Domestic-energy stocks and financials have been strong as well, and there has been renewed interest in Latin America as investors hope for a change of leadership in Brazil.

Company news is mostly bearish this morning. Guess declined 9 percent after reporting weaker-than-expected sales and profit, while Abercrombie & Fitch shed more than 6 percent on a weak revenue number. Sungy Mobile, a small-cap Chinese developer of smart-phone apps, cratered 19 percent after results trailed consensus and its user base shrank. Genesco missed earnings estimates and cut its guidance, sending the shoe retailer down almost 6 percent.

The event calendar turns quiet after this morning's big economic news, which will likely result in low trading volumes ahead of Labor Day weekend. Next week brings several big data points such as the Institute for Supply Management's manufacturing report on Tuesday, ADP's private-sector payrolls report on Thursday and non-farm payrolls Friday.

Energy futures and agricultural products are up fractionally this morning.

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