S&P falls 1.4 pct in safety flight on N. Korea tensions

Claudine Rigal
Août 13, 2017

The CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the United States presidential election on Thursday, but was down 1.22 points at 14.82 points on Friday. The Nasdaq composite rose 0.64% to 6,256.56 as large-cap tech stocks rebounded. Is that a reason to be?

Asian stocks fell across the board on Friday as the escalation in tensions surrounding North Korea continued to push investors towards safe-haven assets such as the Japanese yen, the Swiss franc and gold.

Analysts described less unease than in prior days, even though the North Korea situation had not appreciably changed.

The president said "things will happen to them they never thought possible" should Pyongyang attack the US or its allies.

Smaller-company stocks also fell sharply.

Still, the S&P and the Dow were on track to post their biggest weekly loss in about five months and the Nasdaq on course to post its biggest weekly fall in about six weeks.

As is often the case, Wall Street was treated to volatility in August, the stock market's most turbulent month.

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Mapped: US and Allied Missile Defenses Against North Korea

With Japan and South Korea also warning North Korea, investors are taking a step back to see what is happening before chipping in back, Bakhos said. The index posted its third-worst weekly performance of the year.

In other news, United States wholesale inflation dropped in July, the first contraction in almost a year and another data point that could weaken the case for the Federal Reserve to raise the benchmark interest rate again later this year.

Minneapolis Fed President Neel Kashkari, who has advocated for the Fed to halt interest rate hikes until inflation picks up gain, on Friday said his colleagues are telling each other "a ghost story (http://www.marketwatch.com/story/feds-kashkari-says-central-banks-hawks-are-spooked-by-ghost-story-of-higher-wages-2017-08-11)" about higher wage inflation that scared them into raising short-term rates. It measures the daily stock price movements of 30 large, publicly-owned US companies.

Australian shares fell to near three-week lows in a broad-based selloff.

In contrast to the USA market, global equities remained weak. Hong Kong's Hang Seng Index plummeted 560.49 points or 2 percent to 26,883.51. Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover. They suggest the US and China, a North Korean ally, could work together to de-escalate the situation.

Shares of J.C. Penney dropped 78 cents, or 17%, to $3.93 Friday after the department store's second-quarter loss exceeded expectations.

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