Stock Market Today: Downed Jet in Ukraine, Escalating Conflict Rattle U.S. Markets

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NEW YORK ( TheStreet) -- News of a downed Malaysia Airlines jet in eastern Ukraine unnerved U.S. markets on Wednesday, sending benchmark indices sliding into the close. According to Ukraine's Interior Ministry, the crash was caused by a missile, though pro-Russian separatists have not claimed responsibility. The flight was reportedly carrying 280 passengers and 15 crew. The development is the latest in an escalating conflict along the Ukrainian border, allegedly exacerbated by Russian interference.

Markets were already lower, though much less so, after a new round of sanctions against Russia from the Obama administration were announced, including restrictions placed on Rosneft, the largest oil company in the world, and Novatek, the second-largest gas producer in Russia. Russian bank Gazprombank, subject to the sanctions, is seeking a $1 billion loan from an international consortium of banks to refinance a $1.2 billion loan maturing in September. 

Major U.S. banks were falling with the broader market selloff.  Bank of America  closed down 2% to $15.20, Citigroup  1.3% to $49.18, Goldman Sachs   0.19% to $170.14, and JPMorgan  1.5% to $57.86.  Morgan Stanley   more than  doubled its quarterly net income  to 94 cents a share from 41 cents a share a year earlier. Shares of Morgan Stanley were down 0.62% to $32.30.

The Dow Jones Industrial Average dropped 0.94% to 16,976.81, gapping from its record close of 17,1382.2 a day earlier. The S&P 500 slid 1.2% to 1,958.12, while the Nasdaq fell 1.4% to 4,363.45.

Gold prices have spiked as investors seek alternate markets to equities suffering from the turmoil and sanctions. Gold futures for August delivery were up 1.3% to $1,316.20 an ounce, while the Gold Miners ETF   and SPDR Gold Trust   spiked 2.7% to $26.99 and 1.7% to $127.07, respectively.

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In economic data stateside, June housing starts declined 9.3% to 893,000 units, heaping on top of a 7.3% drop a month earlier and missing estimates of 1.026 million units. The labor market continued to improve with initial jobless claims slipping 3,000 in the week ended July 12 to 302,000. Analysts had expected 310,000 claims.

The Philly Fed survey indicated general business conditions rose. The survey jumped to 23.9 from 17.8 a month earlier. Indicators of future activity increased, suggesting optimism in growth prospects through to the year's end.

Microsoft  CEO Satya Nadella said the software giant plans to cut 18,000 jobs by the end of 2015, including 12,500 in its Nokia division. Microsoft acquired the unit in April for $7.2 billion and committed to cutting costs by $600 million per year in the 18 months from the completion of the acquisition. Microsoft shares closed 1% higher to $44.53.