Premarket drops by Priceline, Netflix, Disney and TripAdvisor also hurt
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U.S. stock-index futures pointed to a lower open on Wednesday, suggesting equities could extend their retreat from record levels amid growing geopolitical uncertainty and disappointing quarterly results in high-profile companies.
In the latest escalation of tensions between the U.S. and North Korea, the isolated Asian country threatened a missile strike (http://www.marketwatch.com/story/north-korea-threatens-missile-strike-on-us-base-on-guam-2017-08-08) on a U.S. military base on Guam. That saber-rattling came a day after U.S. President Donald Trump said he would respond with "fire and fury like the world has never seen (http://www.marketwatch.com/story/trump-today-president-says-north-korea-faces-fire-and-fury-if-it-doesnt-halt-threats-2017-08-08)" if the country doesn't halt its threats.
S&P 500 futures lost 10.30 points, or 0.4%, to 2,462.50, while Dow Jones Industrial Average futures shed 40 points, or 0.2%, to 21,990.00. Futures for the tech-heavy Nasdaq-100 gave up 33.50 points, or 0.6%, to 5,884.50
Check out:Guam's governor says 'there is no threat' but U.S. island 'will be defended' (http://www.marketwatch.com/story/guams-governor-there-is-no-threat-but-american-island-will-be-defended-2017-08-09)
The geopolitical uncertainty comes at a time when stocks have enjoyed a lengthy run upward. The Dow recently rose for 10 straight sessions, a streak that ended on Tuesday, ending at records in nine of those days. The S&P 500 is also within 1 percentage point of its own record, with the Nasdaq Composite Index not far behind.
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Recent market action has been slight, with small intraday moves and low volatility. On Monday, the S&P 500 moved in a range of just 0.2%, the third smallest range of the past 20 years, according to data from LPL Financial. Meanwhile, the CBOE Volatility index has been near all-time lows. If investors use the geopolitical issue as an opportunity to take profits, that could amplify the size of the swing that could occur.
Related:A problem for buy-the-dip investors: no dips to buy (http://www.marketwatch.com/story/a-problem-for-buy-the-dip-investors-no-dips-to-buy-2017-08-08)
"The higher the market is, and the longer it has been since we've had a pullback, that creates a lot more room to the downside, and a lot more room for volatility to spike," said Randy Frederick, vice president of trading and derivatives for Charles Schwab. "We've had an unprecedented period of calm, and any prudent investor has seen significant gains, so any kind of tension or concern or catalyst is an opportunity to take money off the table. No one wants to see military escalation, but we think a pullback is healthy."
Adding to the weakness in Dow futures was Walt Disney Co.(DIS), which fell 3.8% in premarket trading. The media giant late Tuesday announced plans to end (http://www.marketwatch.com/story/disney-details-launch-of-espn-and-disney-streaming-services-plans-end-of-netflix-deal-2017-08-08) its distribution deal with Netflix Inc.(NFLX) and launch its own ESPN and Disney streaming services. Shares in streaming giant Netflix, a major contributor to the overall market's gains this year, fell 3.9% premarket.
See:Disney and Netflix was always a short-term relationship (http://www.marketwatch.com/story/disney-and-netflix-was-always-a-short-term-relationship-2017-08-08)
And read:What the ESPN streaming service will look like (http://www.marketwatch.com/story/what-the-espn-streaming-service-will-look-like-2017-08-08)
Other markets:Gold futures (http://www.marketwatch.com/story/gold-gains-about-1-as-us-north-korea-tensions-grow-2017-08-09) gained 0.8% as investors moved toward safety plays, with the Swiss franc (http://www.marketwatch.com/story/dollar-slides-vs-swiss-franc-as-us-north-korea-discord-prompts-run-to-safety-2017-08-09) up 1%. European equities (http://www.marketwatch.com/story/european-stocks-slide-as-us-north-korea-strife-sends-haven-assets-higher-2017-08-09) traded lower, after Asian markets mostly closed with losses (http://www.marketwatch.com/story/asian-markets-retreat-as-saber-rattling-over-north-korea-intensifies-2017-08-08). Oil futures stepped up moderately, while a key dollar index was slightly down.
Individual movers:Priceline Group Inc.(PCLN) dropped 7% ahead of the open. The online travel broker late Tuesday posted quarterly earnings that topped forecasts, but bookings missed expectations (http://www.marketwatch.com/story/priceline-shares-plunge-6-on-second-quarter-results-2017-08-08).
TripAdvisor Inc. shares (TRIP) shed 8% for the S&P 500's biggest premarket drop. The operator of travel websites reported weaker-than-expected quarterly results (http://www.marketwatch.com/story/tripadvisor-shares-fall-6-after-company-misses-quarterly-views-2017-08-08) late Tuesday.
Before the opening bell, r (http://www.marketwatch.com/story/office-depots-profit-misses-expectations-as-sales-decline-2017-08-09)etailer Office Depot Inc.(ODP) posted quarterly profit that missed expectations (http://www.marketwatch.com/story/office-depots-profit-misses-expectations-as-sales-decline-2017-08-09). The stock was still inactive in premarket trade.
Drugmaker Mylan NV(MYL) and fast-food chain Wendy's Co.(WEN) are also likely to see active trading as they're among the companies on the earnings docket ahead of the open.
Economic news: Productivity or how many goods and services U.S. workers produce per hour rose at an annual rate of 0.9% in the second quarter (http://www.marketwatch.com/story/us-productivity-picks-up-a-bit-in-second-quarter-2017-08-09) from the prior three months, the Labor Department said Wednesday. This is up from a 0.1% rate in the first quarter.
At 10 a.m. Eastern, a June figure for wholesale inventories is due to hit.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
On the Federal Reserve front, Chicago Fed President Charles Evans is scheduled to talk with reporters about the economy and monetary policy at 1 p.m. Eastern.
(END) Dow Jones Newswires
August 09, 2017 08:51 ET (12:51 GMT)