North Korean tensions help to undercut investor optimism
All three major equity benchmarks stumbled firmly lower on Thursday, with the trifecta of indexes on track to fall in three consecutive sessions in unison for the first time since mid April amid a persistent war of words between the U.S. and North Korea.
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Dow Jones Industrial Average traded 143 points, or 0.6%, lower at 21,915, as Apple Inc.(AAPL) shares dropped more than 2% and Goldman Sachs Group Inc.(GS) shares fell 1.7%
The S&P 500 index gave up 26 points, or 1%, to 2,448, with 10 of the index's 11 sectors trading in the red, led lower by a 1.5% drop in tech shares and more than 1% declines in materials, financials, and consumer-discretionary components.
The tech-laden Nasdaq Composite Index lost 101 points, or 1.7%, to 6,242.
If all three stock gauges finish in the red on the same day for a third straight session, it would be the first time such a streak occurred since April 13, according to WSJ Market Data Group. The Dow is currently 0.9% off its closing record, while the S&P 500 is 1.3% off and the Nasdaq is 2.7% off their respective closing records.
Geopolitical tension gained momentum on Thursday, after a North Korean army commander said, "sound dialogue" isn't possible with President Donald Trump and "only absolute force can work on him," according to state media. North Korea also laid out detailed plans of how it would launch a missile strike on U.S. military bases in Guam (http://www.marketwatch.com/story/north-korea-details-plan-to-fire-missiles-toward-guam-says-only-absolute-force-will-work-with-trump-2017-08-09).
Brian Nick, chief Investment Strategist for TIAA Investments, which has $938 billion in assets under management said few catalysts remain to push stocks higher after earnings season is near wrapping up, which may give added significant to concerns about unease between North Korea and the U.S.
"What will markets take a cue from in that information gap? If it's North Korea, I don't think this will be a fruitful period for equity investors," Nick said.
Stocks finished off their lows, but still held on to losses Wednesday (http://www.marketwatch.com/story/us-stock-futures-pull-back-as-north-korea-threatens-guam-2017-08-09), as investors remained anxious about the U.S.-North Korea war of words and a clutch of disappointing earnings reports.
Some investors, however, still maintained a bullish outlook on equities.
Then again, if this is truly just a war of words, expect the pullback to be short lived, said. "The move down now is geopolitical, and short-lived if nothing happens," Joe Saluzzi, co-head of equity trading at Themis Trading.
Saluzzi sees the North Korea concern as an excuse for traders to sell off in a market near record highs given the strength of earnings season and fairly good economic data that have come out recently. And if that sort of downtrend continues, it would be the kind that many investors have been looking for after 283 trading days without a pullback of 5% or more.
"People want to digest the move and a downtrend now totally makes sense," Saluzzi said. "If the Dow drops 1,000 points over a week that might sound like a lot but it's 5%, and then I think it blows over and buyers start talking about next quarter's earnings."
Meanwhile, traders absorbed a report on jobless claims (http://www.marketwatch.com/story/us-jobless-claims-rise-by-3000-to-244000-2017-08-10) that showed that initial claims for U.S. unemployment-insurance benefits continue to reflect a strong labor market, even as they inched slightly higher. The number of people who applied for U.S. unemployment-insurance benefits rose by 3,000 to 244,000 in the week that ended August 5, the Labor Department reported.
Economists polled by MarketWatch had expected the government to report that initial claims for regular state unemployment-insurance benefits rose 2,000 to 242,000.
Meanwhile, U.S. wholesale prices (http://www.marketwatch.com/story/us-wholesale-inflation-fall-01-in-july-first-decline-in-almost-a-year-2017-08-10) declined in July for the first time in almost a year, providing additional evidence of tepid inflation that is bedeviling the Federal Reserve.
Opinion:Time is running out to avoid war with North Korea (http://www.marketwatch.com/story/time-is-running-out-to-avoid-war-with-north-korea-2017-08-09)
Economic docket: New York Federal Reserve President William Dudley said reaching the Fed's 2% inflation target this year is going to be tough (http://www.marketwatch.com/story/feds-dudley-says-2-inflation-target-will-remain-illusive-even-if-price-pressures-pick-up-2017-08-10) even if monthly data begins picking up.
Stocks to watch: Blue Apron shares tumbled 15%, despite a beat on revenue (http://www.marketwatch.com/story/blue-apron-shares-climb-after-revenue-beat-better-customer-revenue-2017-08-10). Shares of Kohl's (KSS) tumbled by 6.7% after an earnings beat (http://www.marketwatch.com/story/kohls-stock-jumps-premarket-after-earnings-beat-2017-08-10).
Macy's(M) slipped nearly 10% as the retailer reaffirmed downbeat guidance, but reported second-quarter earnings and revenue that beat expectation (http://www.marketwatch.com/story/macys-shares-rise-after-earnings-revenue-beat-2017-08-10)s. Net income was $116.0 million, or 38 cents per share, up from $11.0 million, or 3 cents per share, for the same period last year.
Opinion: Here's one retailer Amazon won't kill (http://www.marketwatch.com/story/heres-one-retailer-amazon-wont-kill-2017-08-09)
Perrigo Co.(PRGO) shares rallied 16% after the drugmaker topped Wall Street estimates (http://www.marketwatch.com/story/perrigo-is-the-rare-generic-drugmaker-that-isnt-suffering-right-now-2017-08-10) for the quarter.
Snapchat parent Snap Inc.(SNAP), Nordstrom Inc.(JWN), News Corp.(NWS.AU) and Nvidia Corp.(NVDA) will report after the close.
Check out earnings previews for Snap (http://www.marketwatch.com/story/snap-earnings-as-facebook-and-google-challenge-turf-new-approach-rolls-out-2017-08-09) (http://www.marketwatch.com/story/snap-earnings-as-facebook-and-google-challenge-turf-new-approach-rolls-out-2017-08-09)and Nvidia (http://www.marketwatch.com/story/nvidia-earnings-cryptocurrency-boom-could-lead-to-new-products-2017-08-08)
(http://www.marketwatch.com/story/nvidia-earnings-cryptocurrency-boom-could-lead-to-new-products-2017-08-08)Other markets: Investors' appetite for assets perceived as haven in times of geopolitical trouble ebbed slightly. The Swiss franc gave up some gains (http://www.marketwatch.com/story/swiss-franc-gives-up-some-gains-as-investors-monitor-us-north-korea-standoff-2017-08-10), as the U.S. dollar was slightly lower across the board. Gold (http://www.marketwatch.com/story/gold-trades-at-2-mo-high-as-north-korea-tension-boosts-haven-investments-over-stocks-2017-08-10) jumped 0.9% to $1,290.50 an ounce, trading at a roughly two-month high.
Read:Here's why export powerhouse Germany is 'euphoric' even with a soaring euro (http://www.marketwatch.com/story/export-reliant-germany-euphoric-even-as-the-euro-soars-yes-heres-why-2017-08-09)
Oil prices (http://www.marketwatch.com/story/oil-struggles-for-direction-as-investors-ponder-us-supply-falls-2017-08-10) climbed 1.3%, but data from the Organization of the Petroleum Exporting Countries showed a further rise in crude-oil production in July (http://www.marketwatch.com/story/opec-production-rises-in-july-in-latest-blow-to-output-deal-2017-08-10).
Asian markets continued to fall on Thursday (http://www.marketwatch.com/story/asian-markets-continue-to-fall-after-wednesdays-selloff-2017-08-09), with losses of over 1% for the Hong Kong Hang Seng Index . European stocks (http://www.marketwatch.com/story/european-stocks-fall-as-caution-over-geopolitical-tensions-linger-2017-08-10) were also in the red.
--Ryan Vlastelica and Barbara Kollmeyer contributed to this article
(END) Dow Jones Newswires
August 10, 2017 13:01 ET (17:01 GMT)