Wall St opens flat as North Korea tensions fade

US stocks opened flat yesterday after North Korea’s leader delayed a decision on firing missiles towards Guam, pointing to receding tensions between the United States and North Korea.

Pyongyang’s plans to fire missiles near the US Pacific territory prompted a surge in tensions in the region last week, with President Donald Trump saying the US military was “locked and loaded” if North Korea acted unwisely.

“I think it is a bit of a follow through on North Korea that has stepped back, things are back to somewhat normal”, said Mark Spellman, portfolio manager at Alpine Funds in New York.

“US companies and the markets have also been benefiting from the global economic expansion. For the first time in many years, you’ve got a lot of economies throughout the world doing better,” Spellman added.

At 9:42 am ET (1342 GMT), the Dow Jones Industrial Average was up 29.01 points, or 0.13 percent, at 22,022.72, the S&P 500 was up 1.17 points, or 0.05 percent, at 2,467.01.

The Nasdaq Composite was up 1.12 points, or 0.02 percent, at 6,341.35.

Six of the 11 major S&P sectors were lower, with telecom sector’s 0.70 percent fall leading the decliners. Data showed US retail sales recorded their biggest increase in seven months in July as consumers boosted purchases of motor vehicles as well as discretionary spending.

The data helped the dollar touch its highest level against a basket of major currencies in nearly three weeks. Among stocks, Home Depot was down 2.6 percent, despite the US home improvement chain reporting quarterly profit and comparable sales that topped estimates. The stock weighed the most on the Dow and the S&P 500.

Coach was off more than 6 percent after the handbag maker issued full-year sales forecast that missed analysts’ estimates. Dick’s Sporting Goods hit near seven-year lows after the sportswear retailer’s quarterly same-store sales and profit missed estimates.

Advance Auto Parts touched near fouryear low after the company lowered its 2017 comparable store sales forecast. Synchrony Financial rose 3.4 percent after Warren Buffett’s Berkshire Hathaway said it had added a 17.5-million share stake in the credit card issuer.

Dollar hits highs

The dollar rose to its highest level against a basket of major currencies in nearly three weeks yesterday after US retail sales data showed the largest gain in seven months. Consumers boosted purchases of motor vehicles as well as discretionary spending, increasing the Commerce Department’s reading on sales by 0.6 percent.

The dollar rose by more than 1 percent against the Japanese yen, touching its highest in more than a week and on pace for its largest daily rise against the yen since June. The euro fell to its lowest against the dollar since Aug. 9. There were two factors that helped push the dollar to its highs, said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington D.C.

“One was that the consumer had been a no-show in recent months, and two was just the tailwind the dollar enjoyed before the data,” he said. “The specter of cooler heads prevailing on the geopolitical front is dollar positive, particularly against safehaven rivals.”

July’s reading showed the largest gain in the retail sales reading since December 2016 and followed June’s upwardly revised 0.3 percent gain. “The number showed broad-based strength, it beat forecasts both on the headline and the core and what was also encouraging was how the number for June got revised from the red back into positive territory,” Manimbo said.

The dollar had earlier been supported by an easing of tensions around North Korea that last week drove capital towards safe-haven currencies. The yen and the Swiss franc had both surged as Washington and Pyongyang ramped up military threats following the imposition of new sanctions on North Korea through the United Nations.

Currency market strategists also pointed to a general recovery by the dollar after its worst four months since 2011 against the euro and the basket of currencies used to measure its strength.

The dollar index was last up 0.7 percent to 94.061. It earlier touched its highest level since July 26. Sterling also slumped after UK inflation numbers came in marginally below forecast, pushing the pound through key levels against both the euro and dollar. — Reuters