Stocks Fall for Third Straight Day as North Korea Tensions Percolate

Cornelia Mascio
Agosto 13, 2017

Meanwhile, the Russell 2000 index of small-cap stocks looked poised for a weekly drop of almost 3%, its biggest one-week decline since February 2016.

Investors' unease over escalating tensions between the United States and North Korea had weighed on stocks earlier in the day, pushing gold and bond prices slightly higher.

The Dow Jones industrial average lost 204 points, or 0.9 percent, to 21,844.

The broad-based S&P 500 was hit even harder, dropping 1.5 percent to close at 2,438.22, while the tech-rich Nasdaq Composite Index lost 2.2 percent 6,216.87.

The Nasdaq Composite dropped 49.53 points, or 0.78 per cent, to 6,320.93.

Volatility gauges from the USA to Japan rose after president Donald Trump said in response to a Washington Post report on North Korea's nuclear capabilities that further threats from the country would be met with "fire and fury".

In more back-and-forth between President Trump and North Korea, Pyongyang General Kim Rak Gyom, leader of the country's strategic forces, said that "sound dialogue is not possible with such a guy bereft of reason and only absolute force can work on [Trump]".

The VIX rose further on Wednesday, rising as far as 12.11, its highest in nearly a month. North Korea responded with threats to launch missiles into the Pacific Ocean near Guam, a US territory.

In Europe, the pan-continental STOXX 600 index fell 0.9 per cent, with falls deepening after a vehicle rammed a group of soldiers in Paris, injuring six, in what officials said was a suspected terrorist attack.

The Standard & Poor's 500 index fell 10 points, or 0.4 percent, to 2,463. Economists had expected prices to rise by 0.2 percent.

CURRENCIES: The dollar slipped to 109.48 yen from 109.85 late Wednesday. Some of Canada's biggest banks were also influential decliners, but closed with only moderate losses.

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. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

Yields on core government debt fell.

The Nasdaq is down 134.69 points, or 2.1 percent. Silver gained 14 cents to $16.39 an ounce.

"The market hates uncertainty and that's certainly what we have now", said Ole Hansen, head of commodity strategy at Saxo Bank. Only utilities sector stocks eked out a gain on a day of mostly listless trading as investors kept an eye on the latest company earnings and geopolitical news.

Data showed the number of Americans filing for unemployment benefits unexpectedly rose last week, but the underlying trend remained consistent with a tightening labor market. Brent crude, used to price worldwide oils, gained 10 cents to $52.24 in London.

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