Banks, tech firms lead stocks lower
Escalating tensions on the Korean peninsula rattled nerves on Wall Street Tuesday, leading to the stock market’s worst day in almost three weeks.
Bank stocks led the slide as bond yields slumped. Technology stocks, the biggest gainers this year, also pulled the market lower. Energy companies climbed the most as the price of crude oil rose.
Traders also bid up shares in traditional safehaven investments such as utilities and gold, which climbed to the highest level in more than a year.
“Today the risk-off trade really is North Korea front and center,” said Jeff Zipper, managing director of investments at U.S. Bank Private Wealth Management. “Also you have the hurricane last week and the upcoming hurricane, so there’s a lot on the plate for the market to digest.”
The Standard & Poor’s 500 index slid 18.70 points, or 0.8 percent, to 2,457.85. The Dow Jones industrial average slumped 234.25 points, or 1.1 percent, to 21,753.31. The average had been down more than 277 points. The Nasdaq composite lost 59.76 points, or 0.9 percent, to 6,375.57. The Russell 2000 index of smaller-company stocks gave up 13.92 points, or 1 percent, to 1,399.66.
Stocks were coming off back-to-back weekly gains as investors returned from the Labor Day holiday weekend to heightened tensions between the U.S. and North Korea, which conducted its most powerful nuclear test to date on Sunday, triggering U.S. warnings of a “massive military response.”
On Tuesday, South Korean warships conducted live-fire exercises at sea. The U.N. Security Council held an emergency meeting and American Ambassador Nikki Haley said North Korean leader Kim Jong Un is “begging for war.”
The latest developments fueled anxiety in the markets. The VIX, a measure of how much volatility investors expect in stocks, jumped 20.7 percent to 12.23.
Gold rose $14.10, or 1.1 percent, to $1,344.50 an ounce. That’s the highest price since gold hit $1,348.40 an ounce on Sept. 27.
Bond prices also rose. The yield on the 10-year Treasury note fell to 2.06 percent from 2.17 percent late Friday.