USA stocks fall again on North Korea tensions

Xavier Trudeau
Août 13, 2017

All three of the major stock market indexes fell for a third straight session for the first time since April amid continued heated rhetoric between the USA and North Korea.

The price of gold, a safe-haven asset, hit its highest levels in two months as North Korea and the United States exchanged more threats, with North Korea outlining detailed plans for a missile strike near the Pacific territory of Guam.

In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

"Markets are looking for any reason at all for a reset".

"It's incredible when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

Trump's comments on Tuesday ended the Dow's nine-day streak of record closes.

In New York, the Dow Jones industrial average plunged 204.69 points to 21,844.01, while the S&P 500 index dropped 35.81 points to 2,438.21 and the Nasdaq composite index slid 135.46 points to 6,216.87.

MARKETS OVERSEAS: In Europe, Germany's DAX was down 1.1 percent, while France's CAC 40 fell 1.4 percent.

Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 percent.

Retail results are also on investors' mind as the second-quarter earning season winds down.

Data showed USA producer prices unexpectedly fell in July, recording their biggest drop in almost a year, while another set showed the number of Americans filing for unemployment benefits unexpectedly rose last week.

THE QUOTE: "Inflation - or lack of -- has been an ongoing problem for the central bank and some policy makers have voiced concerns about this in recent months as they consider whether to raise interest rates again this year", said Craig Erlam, senior market analyst at OANDA. Wall Street was expecting more inflation. The pan-European benchmark on Wednesday fell 0.7% in a sell-off prompted by tensions between the United States and North Korea escalated.

US DATA: The other potential driver in markets will be upcoming USA economic data, including monthly inflation figures, which could go a long way to determining expectations for the pace at which the Federal Reserve raises interest rates.

J.C. Penney slumped 24.4 percent to a record low after the retailer reported a bigger-than-expected quarterly loss.

Perrigo surged 16.08% after the drugmaker raised its full-year adjusted profit forecast.

Declining issues outnumbered advancing ones on the TSX by 164 to 80, for a 2.05-to-1 ratio on the downside.

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