Wall St. slips amid N. Korea tensions
US stocks were lower on Wednesday as investors scurried to safe-haven assets after US President Donald Trump’s “fire and fury” warning to North Korea escalated tensions with the nuclear-armed nation.
North Korea said it was considering plans to fire missiles at Guam, a US-held Pacific island, after Trump’s warning on Tuesday.
Safe-haven assets gained following the mounting geopolitical tensions. Gold rose as much as 1.2% to a near two-month high, while the Swiss franc was on track to post its biggest single day rise in about two-and-a-half years.
Trump’s comments also sparked a late afternoon selling on Tuesday, with the Dow ending a nine-day streak of closing records.
The president followed his Tuesday warning with a tweet on Wednesday about the strength of the American nuclear arsenal, but expressed hope it would not need to be used.
The CBOE Volatility Index, the most widely followed barometer of expected nearterm stock market volatility, was up 1.17 points at 12.12 points, its highest level in a month.
“Geopolitics splashed cold water on the markets,” said JJ Kinahan, chief strategist at TD Ameritrade. “There’s uncertainty and caution as investors nervously eye the next foreign policy moves.”
US trading volume has been low with summer setting in and Congress expected to be in recess until September 5. The S&P hasn’t moved more than 0.5% in one day since July and has fallen more than 1% only twice this year.
“Despite all this, there’s no reason to press the panic button. For now, the North Korea situation bears watching as there’s lots of tough talk, but we’ll see if it escalates,” said Kinahan.
At 10:43 a.m. ET (1443 GMT), the Dow Jones Industrial Average was down 52.43 points, or 0.24%, at 22,032.91, the S&P 500 was down 5.29 points, or 0.21%, at 2,469.63.
The Nasdaq Composite was down 30.74 points, or 0.48%, at 6,339.72.
Nine of the 11 major S&P sectors were lower, with the consumer discretionary index’s 10.2% fall leading the decliners.
Shares of Dow component Walt Disney were down 4.44% as investors doubted whether it can succeed with its plan to launch its own streaming services rather than rely on Netflix Inc. to reach online viewers (for more on Disney see p. 18). Netflix was down 2.35%.
Travel website operator Priceline fell 7.92%, weighing the most on the S&P and the Nasdaq, following a disappointing forecast. Travel-review website operator Trip Advisor was down 7.35%.
Office Depot tumbled 23.57% after the office supplies retailer’s quarterly results came in below estimates.
Rising geopolitical tensions boosted defense stocks. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, lifting the Dow Jones US defense index 1.17%.
Declining issues outnumbered advancers on the NYSE by 1,899 to 859. On the Nasdaq, 1,881 issues fell and 795 advanced. (Reuters)