Wall Street recoups losses but N.Korea concerns linger

By Sruthi Shankar and Tanya Agrawal

REUTERS - U.S. stocks were largely unchanged in late-morning trading on Tuesday after sharply recovering from session lows as investors assessed President Donald Trump's response to the latest missile test by North Korea.

The Dow Jones Industrial average dropped more than 100 points at open as North Korea's missile test over Japan escalated tensions with the United States and triggered a flight to safety. Trump warned "all options are on the table".

The missile, tested early on Tuesday, flew over Japan and landed in the Pacific about 735 miles off the northern region of Hokkaido, a rare occasion when North Korea fired projectiles over mainland Japan.

"Our interpretation of the present danger ebbs and flows with Trump's response," said Art Hogan, chief market strategist at Wunderlich Securities.

"With a more measured response from the administration, rather than the 'fire and fury' comment that we'd seen earlier, we see a less dramatic effect on the market."

Earlier this month, North Korea warned it would fire four missiles into the sea near the U.S. Pacific territory of Guam after Trump said the country would face "fire and fury" if it threatened the United States.

At 11:18 a.m. ET (1518 GMT), the Dow Jones Industrial Average was up 1.51 points, or 0.01 percent, at 21,809.91 and the S&P 500 was down 3.43 points, or 0.14 percent, at 2,440.81.

The Nasdaq Composite was up 1.23 points, or 0.02 percent, at 6,284.24.

Investors scurried to safe-haven assets, with gold jumping to its highest since November.

The CBOE Volatility Index, a widely followed measure of market anxiety, was up 0.72 points at 12.04. The index touched 14.34 earlier.

Investors are also closely tracking the impact of Tropical Storm Harvey, which has crippled the U.S. energy hub in Texas.

"Harvey is going to have all sorts of effects on the economy and this may well take two-tenths of our GDP going forward into the next couple of quarters," said Hogan.

"Houston is a very large and important city with about 125 S&P companies located in that area."

Nine of the 11 major S&P sectors were lower, with the financial and materials sectors leading the decliners.

Dow component Nike fell 2.3 percent after Morgan Stanley cut its price target by $4 to $64.

Best Buy tumbled 9 percent after the No. 1 U.S. consumer electronics retailer warned that its strong quarterly same-store sales performance should not be seen as a "new normal". The stock was the biggest percentage loser on the S&P.

Declining issues outnumbered advancers on the NYSE by 1,889 to 919. On the Nasdaq, 1,668 issues fell and 1,026 advanced.

(Reporting by Sruthi Shankar and Tanya Agrawal in Bengaluru; Editing by Sriraj Kalluvila)