You are here: Home » Reuters » News
Business Standard

Wall Street falls as investors flee risk on North Korea concerns

Reuters 

By Kimberly Chin

(Reuters) - The S&P 500 index was on track for its first daily drop of more than 1 percent in almost three months on Thursday as investors grew cautious over escalating tensions between the United States and North Korea.

The loss of appetite for risk followed North Korea's claim it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific territory of Guam in an unusually detailed threat. U.S. President Donald Trump said on Thursday afternoon that his earlier warnings to North Korea may not have been tough enough.

The three major U.S. indices have sold off this week amid investors' jitters after Trump said on Tuesday that threats from Pyongyang would be "met with fire and fury like the world has never seen."

Investors bought safe-haven assets such as gold, helping the precious metal touch a two-month high, and the Japanese Yen rose.

"We're due for a little correction here. When you're due, there's always going to be something that happens in the world that's going to make people nervous. It gives them almost a mental excuse to sell. What's happened in North Korea is enough to do that," said Matthew Peterson, Chief Wealth Strategist for LPL Financial in Charlotte, North Carolina.

"Although we certainly can get a five to seven percent correction, we don't think it's the start of a significant bear market."

The CBOE Volatility Index <.VIX>, a barometer of expected near-term stock market volatility, rose to a near three-month high of 15.49. After paring gains it was still on track for its biggest one-day percentage gain since May 17.

The Dow Jones Industrial Average <.DJI> fell 162.59 points, or 0.74 percent, to 21,886.11, the S&P 500 <.SPX> lost 30.54 points, or 1.23 percent, to 2,443.48 and the Nasdaq Composite <.IXIC> dropped 116.67 points, or 1.84 percent, to 6,235.66.

The last time the S&P closed down more than 1 percent was May 17.

The technology sector <.SPLRCT> was the biggest weight on the S&P 500 index with a 1.9-percent drop. But some investors welcomed the dip in the sector, which has been S&P's leading gainer so far this year.

"That's a chance and an opportunity to build your position or to get into it," said Chris Bertelsen, chief investment officer of Aviance Capital Management in Sarasota, Florida.

Shares of Macy's tumbled 10.2 percent and Kohl's was down 6 percent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnaround may still be a long way off.

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

However, Federal Reserve Bank of New York President William Dudley suggested on Thursday that the central bank was on track to raise interest rates once more as he expects sluggish inflation to rise over the next several months.

Selling was broad. Declining issues outnumbered advancing ones on the NYSE 6-to-1; on Nasdaq, a 3.60-to-1 ratio favoured decliners.

(Reporting by Kimberly Chin; Editing by Nick Zieminski)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

RECOMMENDED FOR YOU