North Korea Has Markets Nervous But Not Panicked

Isaac Cain
August 13, 2017

The Dow Jones Industrial Average rose 14.31 points (0.07 per cent) to 21,858.32.

The tech-heavy Nasdaq composite bore the brunt of the sell-off, falling 135.46 points, or 2.1 percent, to 6,216.87.

Read:Few investors are excited about stocks.

The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea.

The North Korea situation isn't the only thing weighing on stocks.

The president said "things will happen to them they never thought possible" should Pyongyang attack the USA or its allies. M stock is now down 0.4% to trade at $23.43, asthe company prepares to report earnings tomorrow. The index posted its second-worst weekly performance of the year.

As is often the case, Wall Street was treated to volatility in August, the stock market's most turbulent month.

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The headlines about North Korea served as a spark to jolt investors out of complacency on the heels of an extended period of calm in the market, said McClellan who shared the following chart in a report. The major index futures are now pointing to a modestly higher open for the markets, with the Dow futures up by 21 points.

The smaller than expected increase in consumer prices has led to optimism that the Federal Reserve will not be in a hurry to raise interest rates. Banks and department store stocks also were among the big decliners.

The price of gold also surged for the second day in a row as the December bullion contract advanced $10.80 U.S.to $1,290.10 U.S.an ounce.

Australian shares fell to near three-week lows in a broad-based selloff. 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). Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

An editorial in China's state-run Global Times (http://www.globaltimes.cn/content/1060791.shtml), published late Thursday local time, added to the pressure on Asian markets. They suggest the USA and China, a North Korean ally, could work together to de-escalate the situation.

Blue Apron shares hit a record low at $5.03 after the meal-kit delivery service provider reported a bigger-than-expected loss in its first quarterly report as a public company.

The rhetoric, which began late Tuesday and continued into Friday, interrupted stocks' march higher and cracked the calm that has enveloped the market for months.

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