At the Close: Market’s Big Gain Dissipates on Fed, Syria Uncertainty; Monster Beverage Falls 6%

So much hope. So much optimism. And so little to show for it.

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After trading up as much as 1.1% this morning, the S&P 500 gained just 0.4% to 1,639.77 today, while the Dow Jones Industrials rose 0.2% to 14,833.96. The Nasdaq Composite advanced 0.6% to 3,612.61.

What made a positive day feel like we’re waiting for the next shoe to drop? Well, first there was good economic data. The Institute for Supply Management's August manufacturing index rose to 55.7 from 55.4 in July and beat economist forecasts. That caused Treasury yields to rise as speculation continued to build that the Fed would start tapering come its September meeting. Capital Economics’ Amna Asaf explains:

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Another monthly increase in the US ISM manufacturing index to a 28-month high of 55.7 in August, after surging to 55.4 in July, suggests that the improvement in overseas activity appears to be benefiting US producers…

Overall, at 55.7, the headline index points to a further acceleration in GDP growth to around 3% annualised in the third quarter, up from 2.5% in the second. We doubt growth will be quite that strong, but clearly this is the sort of the news that could prompt the Fed to begin tapering its monthly asset purchases later this month.

Then there’s Syria, where Republicans and Democrats found that they actually can agree on something–blowing stuff up. Wells Fargo’s Sameer Samana discusses the implications for investors:

A potential attack on Syria has increased geopolitical uncertainty and dampened prospects for international equity and commodity markets over the coming months. Along with the Federal Reserve's stated intention to start tapering bond purchases in the near future, this additional headwind may lead markets to tread water in the near-term. Long-term investors should focus on our constructive outlook for the remainder of this year and beyond, and look for opportunities that may present themselves.

Merrill Lynch’s Savita Subramanian and team recommend buying energy stocks and selling consumer discretionary to protect portfolios from a spike in oil prices: