Markets retreat after two days of gains

NEW YORK - The stock market pulled back slightly Tuesday after two days of gains, as investors focused on the damage that geopolitical tension is causing the global economy.

The Dow Jones industrial average lost 9.44 points, or 0.1 percent, to close at 16,560.54. The Standard & Poor's 500 index fell 3.17 points, or 0.2 percent, to 1,933.75. The Nasdaq composite fell 12.08 points, or 0.3 percent, to 4,389.25.

Energy stocks were among the biggest decliners, dragged down by lower oil prices.

U.S. stock indexes opened modestly higher but turned lower at mid-morning, and stayed there. Investors took a cue from Europe, where Germany's benchmark index fell more than 1 percent and France's CAC 40 fell nearly 1 percent.

An indicator of German investor confidence dropped to its lowest level in 20 months. Investors worried that the Ukraine crisis would start dragging down the German economy, Europe's largest.

The continent is much more exposed to Russia than the U.S. is. Europe also gets most of its natural gas from Russia.

"The Ukraine-Russia situation may be at a standstill politically, but it is weighing on the German economy and, more broadly, the eurozone," said Sean Lynch, a managing director at Wells Fargo Private Bank.

Fears of a Russian invasion of Ukraine have faded in recent days, but worries about conflicts around the globe are likely to keep investors on edge - among them the political machinations and violence in oil-rich Iraq.

On Tuesday, beleaguered Prime Minister Nouri al-Maliki tried to stay in power as Iraqi politicians and the international community rallied behind a political rival.

Energy stocks in the S&P 500 fell 0.7 percent, the most of the 10 sectors in the index. Kinder Morgan declined nearly 2 percent, after rising 9 percent Monday on news it would combine several companies under its control. Anadarko Petroleum and Diamond Offshore Drilling fell more than 2 percent.

Energy stocks have declined in the last month, due largely to falling oil and natural-gas prices. Brent crude, traded in the United Kingdom and considered a broader gauge of the international oil market, is trading at a nine-month low. U.S. crude is at a seven-month low.

The price of U.S. crude oil slipped 71 cents to $97.37 a barrel Tuesday.

In individual stocks, Kate Spade plunged $9.87, or 25 percent, to $29, after executives for the handbag company warned that sales growth could slow this year and profit margins were being hit. The comments came after it reported a better-than-expected quarterly profit.