Stocks plunge over North Korea tensions

Cornelia Mascio
Agosto 13, 2017

The Standard & Poor's 500 index fell 35 points, or 1.4 percent, to 2,438, its biggest drop since mid-May.

USA stock indexes opened higher for the first time in four days on Friday after tepid data pointed to benign inflation that could make the Federal Reserve cautious about raising rates again this year, even as concerns lingered over rising tensions between the United States and North Korea.

The Nasdaq Composite was up 19.35 points, or 0.31%, at 6 236.22.

Investors had rushed to safe-haven assets after strongly worded exchanges between Washington and nuclear-armed North Korea late on Tuesday.

The Dow industrials rose 14.31 points, or less than 0.1%, to 21858.32 on Friday.

The greenback also came under pressure after New York Federal Reserve President William Dudley cautioned it would "take some time" for U.S. inflation to reach the bank's two percent target. "I think a few investors are capitulating to it".

However, an Associated Press report that the USA and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats helped to soothe some of the jitters. It is now on track for its biggest weekly drop since the week before the November 8 United States presidential election.

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.

"The war of words between Donald Trump and North Korean officials has stepped up in recent days and has put investors on edge, prompting a more risk averse approach in the markets", said Oanda analyst Craig Erlam.

The benchmark USA yield on Thursday was just above 2.2 percent, at its lowest level since late June, as investors bought up Treasuries, a classic safe harbor.

Wall Street's fear gauge - the CBOE Volatility Index or the VIX - surged 44%, its second-biggest one-day jump of the year. On Thursday, fellow newly public company Blue Apron Holdings lost 18% after the meal-kit maker reported rising costs amid increased competition.

Macy's posted revenue of $5.55bn which beat consensus estimates of $5.5bn. The stock has more than doubled over the past 12 months, gaining more than 160%.

The U.S. equity market is hovering near record levels and volume has been tepid following the onset of summer. The Stoxx Europe 600 benchmark was down 1% (http://www.marketwatch.com/story/european-stocks-face-worst-week-in-9-months-on-us-north-korea-tensions-2017-08-11), while Hong Kong's Hang Seng led the Asian losses with a drop of 2%.

Kohl's, another department store chain, slumped 8.9 percent after reporting that second-quarter sales dipped 0.9 percent compared with the year-ago period. The company delivered revenue of $1.46bn which beat expectations of $1.42bn. Yields on bonds move inversely to their price.

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