U.S. stocks tumble on North Korea worries

Paterniano Del Favero
Agosto 13, 2017

In a note to investors, Paul Christopher, head global market strategist, and Tracie McMillion, head of global asset allocation, suggest, "the threat of a nuclear weapon is certainly more serious than previous threats, but that threat also may increase the probability of a diplomatic solution".

The Vix, a measure of how much volatility investors expect in stocks, jumped to its highest level since May after North Korea indicated a plan to launch ballistic missiles toward a major US military hub in the Pacific. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, with the Dow Jones US defense index up 1.48 percent at 409.58. Germany's DAX dipped 0.1 per cent as the CAC 40 fell 1.1 per cent in Paris. An in-line print may not be enough to meaningfully rattle the Treasury market, however, which saw 10-year yields crack 2.20 percent on Thursday for the first time since June as part of a flight to safety. The S&P 500 shed 0.8% and the Nasdaq Composite lost 1.3%.

Almost $1 trillion has been wiped out from global equity markets since Trump's vow on Tuesday to unleash "fire and fury" on North Korea if it threatens the United States.

Priceline sank 7.8 percent as it projected third-quarter earnings below Wall Street analyst expectations.

And on Tuesday, shares of Michael Kors jumped 20.31 percent after the retailer raised its full-year revenue forecast, while Ralph Lauren RL.N was up 9.79 percent following revenue and profit beat.

The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.

Health care equipment and services company Henry Schein declined amid a broader slide by health care stocks.

Nvidia soared 55% this year after notching the biggest gains in the S&P 500 in 2016.

On the currency front, the US dollar is trading at 109.74 yen compared to the 110.32 yen it fetched at the close of NY trading on Tuesday. Heating oil fell 1 cent to $1.63 a gallon. Mainland markets also traded below the flat line, with the Shanghai Composite slipping 0.18% and the Shenzhen Composite lower by 0.14%.

The dollar was at an eight-week low against the Japanese yen during Asian trading.

The pound was down 0.09% against the euro at 1.1049 and down nearly 0.2% on the dollar at 1.2978. "In this type of environment, bad news tends to send the market lower". Britain's FTSE 100 added 0.1 percent.

Manufacturing production in June was flat, as predicted, after falling 0.1% in May, while United Kingdom construction output badly missed forecasts fell 0.1% month on month and rose 0.9% year-on-year.

There's a handful of high-profile economic data coming out of the Asia Pacific region to end the week, including: July house sales for New Zealand, the final reading of second-quarter growth as well as July retail sales for Singapore, and Hong Kong's second-quarter growth.

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