Political tensions continue to weigh on stocks

Marco Green
August 13, 2017

"From a geopolitical perspective, we understand why the escalation in tensions will have shaken some of the complacency out of investors", said Eric Wiegand, senior portfolio manager at U.S. Bank Private Client Wealth Management.

USA indexes were trading at session lows on Thursday afternoon, with the Dow and the Nasdaq posting triple-digit point declines, as investors fretted over escalating tensions between the United States and North Korea.

The president followed his Tuesday warning with a tweet on Wednesday about the strength of the American nuclear arsenal, but expressed hope it would not need to be used.

Investors took protection in traditional safe haven assets and put option positions.

Small-company stocks fell more than the rest of the market Wednesday.

Trump's comments sparked a late afternoon selling on Tuesday, with the Dow ending a nine-day streak of closing records. The Dow Jones Industrial Average fell 0.2%, the S&P 500 ended marginally lower and the Nasdaq Composite ended down 0.3%.

Investors piled into safe-haven assets such as United States government bonds, gold and the Japanese yen and sold off shares.

"There's uncertainty and caution as investors nervously eye the next foreign policy moves".

USA trading volume has been low with summer setting in and Congress expected to be in recess until September 5.

"Despite all this, there's no reason to press the panic button". He said that North Korea "can be very very nervous" if it acts on either the U.S. or its allies, and warned that "things will happen to them like they never thought possible".

In Europe, Britain's FTSE 100 was down 1.1 percent to 7,306, while France's CAC 40 fell 1.1 percent to 5,058.

Frankfurt's DAX 30 was also down, shedding 0.1 per cent at 12,142.62 points.

Disney dropped 3.9 percent after reporting a weak quarter and saying it would pull its movies from Netflix and start its own video streaming services.

In the latest economic data, the consumer-price index (http://www.marketwatch.com/story/us-consumer-inflation-remains-soft-in-july-cpi-shows-2017-08-11) rose a seasonally adjusted 0.1% in July, its fifth straight month of softness, raising more questions about whether inflation will eventually rise to hit the Federal Reserve's 2% annual rate target. Travel-review website operator TripAdvisor was down 7.35 percent.

Office Depot tumbled 22.4 percent after the office supplies retailer's quarterly results came in below estimates. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, lifting the Dow Jones U.S. defense index 1.17 percent.

Declining issues outnumbered advancers on the NYSE by 2,309 to 518.

Other reports by Click Lancashire

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