U.S. stocks tumble on North Korea worries

Marco Green
August 13, 2017

The Dow Jones Industrial Average closed down 204.69 points, or 0.93 percent, at 21,844.01, the S&P 500 lost 35.81 points, or 1.45 percent, to end the session at 2,438.21 and the Nasdaq Composite fell 135.46 points, or 2.13 percent, to 6,216.87.

"As a portfolio manager, you say, 'Do I think we'll get a war out of this?'", said Torsten Slok, chief global economist at Deutsche Bank. "And while risks remain elevated from a geopolitical perspective, valuations are not necessarily excessive, though full".

Read:Few investors are excited about stocks.

An Associated Press report that the US 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 may also help to soothe jitters.

Wall Street declined on Thursday, with the S&P 500 registering its first daily drop of more than 1% in nearly three months, as investors grew cautious over escalating tensions between the U.S. and North Korea.

For the week, the Dow is on track to fall 0.9%, its biggest one-week drop since April.

Declining issues outnumbered advancers on the NYSE by 1,847 to 678. The Nasdaq is on track for a weekly loss of 1.5%, its worst since June. Both the Nasdaq and the Russell are set for their third straight weekly decline.

In overseas trading, stock markets across the Asia-Pacific region saw continued weakness during trading on Friday.

Investors said the rhetoric may have sparked some selling, but it wasn't exclusively to blame for the sharp fall.

On the currency front, the US dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday.

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.

Federal Reserve Bank of NY president William Dudley is set to speak later in the day and his comments will be parsed for clues regarding the future pace of interest rate hikes.

Outside the political arena, declines in a pair of technology stocks added to the cautious tone on the day.

The decline was broad, with all the 11 major S&P indexes lower.

In other corporate news, shares of Snapchat parent Snap fell 13% after it reported earnings late Thursday that missed analyst forecasts. Some say expectations for its server-chip business were just too high (http://www.marketwatch.com/story/nvidia-stock-could-pause-as-server-growth-slows-down-2017-08-10). The Stoxx Europe 600 fell 1%, while benchmarks in Hong Kong and South Korea - which had been one of the best performers of 2017 - closed down 2% and 1.7% respectively, Friday, putting the week's drop at 2.5% and 3.2%. Markets in greater China mirrored the slide in global equities.

North Korea responded with a statement by its official KCNA news agency claiming Trump is "driving" the Korean peninsula to the "brink of a nuclear war".

In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely". On August 10, it rose 44.4% to 16.0.

J.C. Penney slumped as much as 18.25 percent to a record low after the retailer reported a bigger-than-expected quarterly loss.

Other reports by Click Lancashire

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