Stocks gain a tad, oil jumps on angst over Russian jet

Geopolitical risk weighed on financial markets Tuesday, as the downing of a Russian fighter jet by Turkey joins the terrorism threat and coming interest rate hikes on Wall Street's worry list.

Still, U.S. benchmarks had eked out small gains by the 4 p.m. ET closing bell, the Nasdaq composite just barely, up 0.01%. The Dow Jones industrial average and the S&P 500 each ended up 0.1%.

Global investors already wrestling with the latest terrorism threat set in motion by the Paris terror attacks on Nov. 13, priced in the latest escalation of tensions following Turkey's downing of a Russian military aircraft near the Syrian border. Russia's president Vladimir Putin called the downing of the jet a "stab in the back."

Putin vows 'tragic consequences' for Turkey

The latest geopolitical flashpoint drove stock prices down in Europe and in early trading in the U.S., sparked a rally in oil and set off a flight to safe-haven assets, such as U.S. and German government bonds. Wall Street fears a potential conflict between Russia and Turkey, a NATO member, which would exacerbate an already combustible situation in the Middle East and terror-focused Europe.

Government bond yields fell, as the yield on the 10-year U.S. Treasury note fell to 2.24%, down from 2.26% Monday. Similarly, the German bund yield fell to 0.511% as investors in Europe seek out a so-called haven.

The rising geopolitical risks resulted in a rally in U.S. based-crude, which rallied more than 3%, rising $1.26 to $43.01 a barrel. Gold also jumped 0.7% to $1,074 an ounce.

European stocks took a dive Tuesday. The broad Stoxx Europe 600 was down 1.2%; the CAC 40 in Paris was off 1.4% while Germany's DAX index was down 1.4%.

Geopolitics is trumping good economic news in the U.S. The second revision on third-quarter GDP rose to 2.1%, up from the first read of 1.5%. Investors also got good news on the U.S. housing market, as home prices in the September series of the S&P/Case-Shiller showed an upward bias in prices. September home prices in 20 major cities rose 0.6% month-over-month.

The economy grew 2.1% in the third quarter

"The Dow is gearing up for a rough day, with futures pointed sharply lower on the latest gross domestic product (GDP) reading," Alex Eppstein, an analyst at Schaeffer's Investment Research, told clients in a morning research note. "Specifically, the U.S. economy grew at an upwardly revised 2.1% rate during the third quarter, as expected, sparkingrate-hikejitters. Adding to the early morning skittishness are reports that a Russian warplane has been shot down along the Turkey-Syria border."

Genworth Mortgage Insurance chief economist Tian Liu on the latest housing data: "The housing market's fundamentals remain strong, and we expect moderate home price appreciation to continue – supported by moderate income growth and historicallylow interestrate. We're glad to see the continued upward trajectory in home price carry into the latter half of the year."

Adam Shell on Twitter: @adamshell.