Futures sharply lower amid jitters over Syria

U.S. stock index futures were sharply lower Tuesday amid building worries over potential U.S. military action in Syria.

Defense Secretary Chuck Hagel told the BBC the U.S. military is "ready to go" if President Barack Obama orders action over a chemical weapons attack in Syria.

Meanwhile, NBC News reported the U.S. could launch a missile strike against Syria "as early as Thursday."

On Monday, U.S. Secretary of State John Kerry said he believed Syria had used chemical weapons on its own people, and that the Syrian government must be held to account.

(Read more: Syria premium seen building in oil, gold)

Oil prices spiked above $108 a barrel amid worries that potential military action in the Middle East could disrupt oil production.

John Kilduff of Again Capital said that Syria's location was vital, even though it is not a major oil exporter.

"It's clearly become a proxy war for almost the whole region," said Kilduff. "What's happening is you have Egypt and Syria that are not oil producers…You have a tight market and two significant flash points,and it keeps getting undermined by things like the problems with the Libyan oil, the lack of Iranian oil."

(Read more: Is a spike in oil prices around the corner?)

On the economic front, home prices gained 0.9 percent in June on a seasonally-adjusted basis, according to the S&P/Case Shiller composite index. On a non-adjusted basis, prices rose 2.2 percent. Compared to a year earlier, prices were up 12.1 percent, in line with economists' expectations.

The Conference Board is scheduled to release consumer confidence for August at 10 am ET.

Monday's weaker-than-expected manufacturing data boosted hopes for a later start to the scaling back of Federal Reserve asset purchases.

(Read more: US durable goods plunge in July, cash shadow over Q3)

"Recent data releases are consistent with the U.S. economy still remaining in a soft patch in early third quarter. However, it only marginally argues against the Fed tapering quantitative easing in September," said Bank of Tokyo-Mitsubishi's Lee Hardman in a research note.

(Read more: Insider says Summers may be named Fed chief soon)

JCPenney slumped after Pershing Square's Bill Ackman sold his entire 18-percent stake in the retailer, totaling nearly 39 million shares. Ackman quit the board two weeks ago amid clashes with the company and other directors over strategy.

Among earnings, Tiffany edged higher after the upscale jewelry retailer raised its earnings forecast for the year as robust sales in China and higher prices helped offset weak business in the U.S.

TiVo is scheduled to post earnings after the closing bell.

Meanwhile, the Treasury will auction $24 billion in 2-year notes with the results available shortly after 1 p.m.

—By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

Coming Up This Week:

TUESDAY: Consumer confidence, Richmond Fed mfg index, 2-yr note auction, Apple DoJ hearing; Earnings from TiVo
WEDNESDAY: MBA mortgage applications, pending home sales index, oil inventories, 5-yr note auction; Brown-Forman, Joy Global, Chico's, Williams-Sonoma
THURSDAY: GDP, jobless claims, corporate profits, natural gas inventories, 7-yr note auction, Fed's Lacker speaks, Fed's balance sheet/money supply, Fed's Bullard speaks, AMR hearing, weekly rail numbers; Earnings from Campbell Soup, Pall, Salesforce.com, Splunk, Krispy Kreme
FRIDAY: Personal income & outlays, Fed's Bullard speaks, Chicago PMI, consumer sentiment, farm prices

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