US stocks fall on Iraq worries

Iraqi Shi'ite volunteers who have joined government forces to fight Sunni jihadists from the Islamic State take part in a training session near the southern port city of Basra on August 7, 2014. Advances by jihadists in Iraq spurred talk of possible
Iraqi Shi'ite volunteers who have joined government forces to fight Sunni jihadists from the Islamic State take part in a training session near the southern port city of Basra on August 7, 2014. Advances by jihadists in Iraq spurred talk of possible military action by the US on Thursday, spooking investors. -- PHOTO: AFP

NEW YORK (AFP) - US stocks finished lower Thursday as advances by jihadists in Iraq spurred talk of possible military action by the US.

At the closing bell, the Dow Jones Industrial Average was down 75.62 points (0.46 per cent) at 16,367.72.

The broad-based S&P 500 fell 10.69 (0.56 per cent) to 1,909.55, while the tech-rich Nasdaq Composite Index lost 20.08 (0.46 per cent) at 4,334.97.

Jihadists seized Qaraqosh, Iraq's largest Christian town, sending tens of thousands of panicked residents fleeing in one of the most dramatic developments of the two month-old conflict.

White House spokesman Josh Earnest, warning of a possible "humanitarian catastrophe," would not confirm the reports that US airstrikes are on the table, but said American personnel were studying conditions on the ground in cooperation with Iraqi security forces.

"The Iraq situation has taken a turn probably for the worse," said Brent Schutte, market strategist at BMO Global Asset Management.

"The US is potentially going to get more involved because that Islamist group keeps making gains."