Gold jumps to almost one-year high
U.S. stock-index benchmarks traded lower on Tuesday, but off their lows, after a North Korean missile test over Japanese airspace rattled investors and sent them trawling for assets perceived as safer than equities.
The Dow Jones Industrial Average fell 54 points, or 0.3%, to 21,752. The S&P lost 11 points to 2,433, a decline of 0.4%. The Nasdaq Composite Index was off 29 points to 6,253, a drop of 0.4%.
The decline in stock futures started 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).
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.
"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.
With the day's decline, the Dow is on track for its fourth drop in the past five sessions. The S&P has ended lower in three of the past five. The Nasdaq has been in a more pronounced downtrend of late, and is on track for its 11th decline of the past 16 trading days.
The decline 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 trading within 2 percentage points of all-time highs. Beyond geopolitical concerns, investors have also been concerned about Wall Street valuations, and looking to other regions beyond U.S. stocks (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. 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%.
The CBOE VIX Volatility index jumped 16%, or less than two points, hitting 13.21. Despite the spike, it remains well below its long-term average of 20.
Meanwhile, the ICE Dollar Index slid 0.4% to 91.88, near its lowest 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 fell to Yen108.70, compared with Yen109.26 late Monday in New York.
The dollar also suffered 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 0.5% while the iShares U.S. Insurance ETF (IAK) was off 0.4% and the PowerShares KBW Property & Casualty Insurance Portfolio (KBWP). All three are down more than 1% thus far this week, with the PowerShares ETF off more than 2%.
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 turned lower on Tuesday, with the October contract down 0.8% to $1.56 a gallon. Crude oil prices fell 0.1% 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 1%, and Anadarko Petroleum Corp.(APC) lost 1.5%. The overall energy sector (XLE) was down 0.6% 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 14% 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 23% 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 9.3% 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.
There were no Federal Reserve speakers on the docket for Tuesday.
(END) Dow Jones Newswires
August 29, 2017 10:13 ET (14:13 GMT)