Gold touches almost one-year high
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U.S. stock benchmarks on Tuesday staged a recovery from heavy selling earlier in the session, that came after a North Korean missile test over Japanese airspace rattled investors and sent Wall Street trawling for assets perceived as safe.
The Dow Jones Industrial Average traded 23 points, or 0.1%, higher at 21,831. Blue chips had been off by as much as 135 points or 0.6% at its intraday nadir, with a rise in Boeing Co. (BA) and United Technologies Corp. (UTX) helping to power a mini rally.
The S&P 500 index was little changed, down less than a point, at 2,444. The broad-market gauge had been down by about 16 points or 0.7% at its lows.
Meanwhile, the Nasdaq Composite Index advanced 13 points, or 0.2%, to 6,295.
U.S. equity futures sold off late Monday, after North Korea launched a ballistic missile over Japan, seen as another direct provocation that could destabilize the region (http://www.marketwatch.com/story/north-koreas-outrageous-missile-launch-over-japan-inflames-tensions-again-2017-08-29).
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Japanese Prime Minister Shinzo Abe called the missile test an "unprecedented, grave and serious threat that seriously damages peace and security in the region." U.S. President Donald Trump has previously said the U.S. would react with "fire and fury" if Pyongyang stepped up threats against the U.S. and its allies. On Tuesday morning, he said that "all options are on the table" (http://www.marketwatch.com/story/trump-all-options-are-on-the-table-after-north-korea-missile-test-2017-08-29) following the North Korean missile launch.
Some traders told MarketWatch that the "measured" statement by Trump and the rest of the global community so far has provided a modicum of comfort to investors. "The response around the world, it was measured as of now and I think it was probably helpful to the market," said Mark Kepner, managing director of sales and trading at Themis Trading.
Kepner said the market wasn't being dismissive of the latest military threat out of Pyongyang but said seasonally low volumes for the summer also make equity benchmarks more prone to swings.
"North Korea is drawing another line in the sand, a little further out than the last line. This has real psychological ramifications for the markets; this might not end in a pretty fashion. However, it doesn't seem like there is panic selling going on, which is a good thing," said Tim Ghriskey, chief investment officer of Solaris Group.
The volatile trading action comes at a time when major U.S. stock-market indexes are solidly higher for the year, and trading near record levels. The S&P is up more than 9% in 2017, and is within 2 percentage points of all-time highs. Beyond geopolitical concerns, investors have also been worried about Wall Street valuations.
Read: Overseas stocks are still where the bargains are for U.S. investors (http://www.marketwatch.com/story/overseas-stocks-are-still-where-the-bargains-are-for-us-investors-2017-08-24)
"Valuation is rarely the only factor behind a market selloff, but it can exacerbate a market downturn when other factors are present," Ghriskey said. "We're not concerned about the market at these levels, but the Korea situation could get out of hand, which is the last thing anyone wants from a human or a market perspective."
Gold futures jumped $10.20, or 0.8%, to around $1,325 an ounce, trading around the highest level since September. In other haven trading, the yield on 10-year U.S. Treasury notes fell 5 basis points to 2.11%.
See also: Gold's 2016 peak now looks easy to reach after the metal's big breakout (http://www.marketwatch.com/story/golds-2016-peak-now-looks-easy-to-reach-after-the-metals-big-breakout-2017-08-29)
Stocks in Europe and Asia were also hit (http://www.marketwatch.com/story/asian-markets-jolted-by-north-korean-missile-test-over-japan-2017-08-28), with most benchmarks mired in red. Stocks in Europe suffered the biggest fall (http://www.marketwatch.com/story/dax-suffers-as-european-stocks-slide-to-6-month-low-on-north-korea-spurred-selloff-2017-08-29), with the Stoxx Europe 600 index down 1.3%.
Meanwhile, the ICE Dollar Index was flat at o 92.24, coming off its lowest level since January 2015 (http://www.marketwatch.com/story/dollar-dives-to-lowest-since-early-2015-rattled-by-north-korea-missile-launch-2017-08-29). The greenback recovered all the ground an early downturn against the Japanese yen trading at Yen109.42, compared with Yen109.26 late Monday in New York.
The dollar was trading flat but still holding near under uncertainty of how the devastating Hurricane Harvey that rampaged Texas over the weekend will hit the U.S. economy and impact the Federal Reserve rate decisions. The storm system is expected to make landfall again this week (http://www.marketwatch.com/story/harvey-set-to-pummel-flooded-houston-once-again-2017-08-29) and to add another 20 inches of rain for an total of 50 inches.
Insurance companies were hurt by the storm, the full extent to the damage of which remains unknown. The SPDR S&P Insurance ETF(KIE) fell 0.6% while the iShares U.S. Insurance ETF (IAK) was off 0.5%. The PowerShares KBW Property & Casualty Insurance Portfolio (KBWP) was trading 0.3% lower on the day, but all three are down more than 1% thus far this week.
ReadCaroline Baum: No, hurricanes aren't good for the economy (http://www.marketwatch.com/story/no-hurricanes-are-not-good-for-the-economy-2017-08-28)
And see:Hurricane Harvey highlights biggest impact of shale-oil revolution (http://www.marketwatch.com/story/oil-markets-harvey-reaction-a-product-of-shale-revolution-2017-08-28)
Gas prices declined on Tuesday, with the October contract down 0.8% to $1.56 a gallon. Crude oil prices fell 0.4% to $46.52 a barrel.
Stock movers: Shares of oil refiners were among biggest movers on Tuesday, with shares volatile following the fallout from Harvey. The storm is estimated to have reduced refining capacity along the Texas Gulf Coast by more than 2 million barrels a day, which could help to lift fuel margins and benefit refiners.
Shares of Marathon Petroleum Corp.(MPC) were down 2.1%, and Anadarko Petroleum Corp.(APC) lost 1.4%. The overall energy sector (XLE) was 0.2% lower as one of the biggest decliners of the day.
Acorda Therapeutics Inc.(ACOR) plunged 26% after the U.S. Food and Drug Administration rejected the company's application (http://www.marketwatch.com/story/acorda-therapeutics-shares-crater-24-premarket-after-fda-rejects-application-for-parkinsons-treatment-2017-08-29) for a drug to treat the symptoms of Parkinson's disease.
J. Jill Inc. (JILL) tumbled 15.2% after it reported its second-quarter results and gave an outlook (http://www.marketwatch.com/story/jjill-shares-fall-10-premarket-2017-08-29), the midpoint of which was below analyst consensus expectations.
Shares of Finish Line Inc. (FINL) tumbled by 20% after the athletics-wear company late Monday issued a profit warning (http://www.marketwatch.com/story/finish-line-slashes-forecast-adopts-poison-pill-2017-08-28) and approved a plan aimed at blocking any individual stockholder from owning more than 12.5% of the shares outstanding.
Best Buy Co Inc.(BBY) sank 12% despite reporting earnings that beat forecasts (http://www.marketwatch.com/story/best-buy-shares-gain-5-after-companys-fiscal-q2-earnings-hit-above-wall-street-expectations-2017-08-29).
Economic news:The S&P/Case-Shiller 20-city index (http://www.marketwatch.com/story/home-price-gains-were-hot-in-june-as-seattle-sizzled-case-shiller-says-2017-08-29) rose a seasonally adjusted 5.7% in the three-month period ending in June, compared with a year ago, the same rate of change as in May.
Consumers confidence strengthened in August (http://www.marketwatch.com/story/consumer-confidence-strengthens-in-august-2017-08-29), and remains just below a 16-year high. The modest recovery in stocks followed the release of the data.
There were no Federal Reserve speakers on the docket for Tuesday.
--Sara Sjolin contributed to this article
(END) Dow Jones Newswires
August 29, 2017 14:19 ET (18:19 GMT)