Dow slips 100 points as tensions with N Korea escalate

Xavier Trudeau
Août 13, 2017

Major U.S. indices had posted record highs in recent weeks. But Mellor notes the rhetoric has reached a "different level". "So why buy risk assets (such as equities or credit) when the thematic at hand isn't going to resolve itself in the immediate short-term?" They suggest the USA and China, a North Korean ally, could work together to de-escalate the situation.

Damage for the week: The days of verbal sparring between Washington and Pyongyang looks set to bruise weekly performances for the major US indexes. The S&P 500 added 0.3%, though it was on course to end the week down 1.3%, its biggest loss since March.

The influential financial stocks were among the biggest drags on the index, with Royal Bank of Canada down 1.5 percent to C$92.88, and Manulife Financial Corp falling 4.7 percent to C$24.43, its largest drop since early August past year. On the Nasdaq, 2,082 issues fell and 669 advanced.

"Results have been fairly OK, but the reaction to the results has been on the soft side. which perhaps suggests investors are increasingly nervous that valuations are getting to unsustainable levels", said DNB's Harper.

"U.S. tech is a case in point". For the week, the benchmark slipped 2.6%. Eastern Time, alongside core CPI. China's Shanghai Composite followed suit with a 0.4% retreat, after the latest consumer prices index for the country rose less than expected, and the producer price index met forecasts.

Such an outcome would normally boost the US dollar, Spivak said in a note.

Markets had taken heart earlier in the day after US Secretary of State Rex Tillerson sought to play down the escalating war of words between Washington and Pyongyang.

On the Fed speaker list, Dallas Fed President Rob Kaplan is scheduled to appear in a question-and-answer session at the University of Texas Arlington, in Arlington, Virginia, at 9:40 a.m.

ValueAct sold 7 million shares of this Dow stock.

Winners and Losers: Live-events company Live Nation saw its stock climb more than five percent Thursday on news that concert ticket sales jumped 22 percent from a year ago. Some say expectations for its server-chip business were just too high (http://www.marketwatch.com/story/nvidia-stock-could-pause-as-server-growth-slows-down-2017-08-10). Seagate shares rose 74 cents to $32.29.

Overseas markets were also lower Wednesday.

J.C. Penney Co.(JCP) is on tap to report quarterly earnings ahead of the market open.

Shane Oliver, head of investment strategy at AMP Capital in Sydney, said: "What has changed this time is that the scary threats and war of words between the United States and North Korea have intensified to the point that markets can't ignore it".

Gold held steady at two-month high with spot gold rising 0.1 percent to $1,287.83 per ounce, putting the precious metal on pace for its biggest weekly gains since April.

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