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Stocks Plummet on Prospect of U.S.-Led Airstrike on Syria

Tickers in this article: AKRX GME HITK JCP OKS ^DJI ^GSPC ^IXIC

NEW YORK ( TheStreet) -- The S&P 500 posted its largest drop since June as stocks tumbled on reports the U.S. may spearhead a multi-country military intervention against Syria this week in response to evidence of chemical weapons.

The S&P 500 dropped 1.6% to close 1,630.48, the largest drop since June 20 when the benchmark index fell 2.5%. The Dow Jones Industrial Average shed 1.1% to 14,776.48 while the Nasdaq was off 2.2% to 3,578.52.

"Obviously we've had a pretty down day, and right now it seems like it's all about Syria and the uncertainty," said Joe Bell, senior equity analyst at Schaffer's Investment Research. "We saw a lot of money flow over to the bond market today -- a little bit of a safety trade on the day here."

Another factor at play is the fast approaching debt ceiling deadline, the annual Congressional melodrama that has roiled markets in recent years.

"This is no longer simply about Syria," George Friedman, chairman of the Austin, Texas-based global security intelligence firm Stratfor warned in a report. "The United States has stated a condition that commits it to an intervention. If it does not act when there is a clear violation of the condition, Obama increases the chance of war with other countries like North Korea and Iran."

The missile strikes against the Middle Eastern nation could begin as early as Thursday, according to NBC News, which cited senior U.S. officials. The report said the U.S. may be preparing for three days of strikes to serve as a warning to the Assad regime. Meanwhile U.S. Defense Secretary Chuck Hagel told BBC that the U.S.-led forces would be "ready" to strike if President Barack Obama ordered an attack. Allies of Syria including Russia and China have been warning against military intervention in the country warning of the devastating results for the region.

"It is hard to imagine how an attack on chemical weapons can avoid an attack on the regime -- and regimes are not destroyed from the air," Friedman added. "Doing so requires troops. Moreover, regimes that are destroyed must be replaced."

Goodyear was the biggest percentage gainer on the S&P 500, up 2% to $19.01, while GameStop posted the largest percentage loss with shares off 5.8% to $49.37.

J.C. Penney shares fell 1.4% to $13.17 after Pershing Square Capital Management's Bill Ackman revealed that he is selling his entire stake in J.C. Penney.

In deal news, specialty pharmaceuticals firm Akorn said Tuesday it would acquire Hi-Tech Pharmacal in a $540 million cash deal that would expand the maker of eye-care products into new areas. Akorn surged 9.6% to $18.02 and Hi-Tech Pharmacal leapt 22.1% to $42.99.

Tulsa, Okla., natural gas transporter Oneok Partners bought processing assets in Wyoming for $305 million as part of a planned $440 million investment in the natural gas liquids-rich area of the Powder River Basin. Oneok shares rose incrementally to $49.77