Simmering North Korea tensions knock back Wall Street

Ivan Schwartz
August 12, 2017

The Dow Jones Industrial Average rose 14.31 points, or 0.07 per cent, to end at 21,858.32, the S&P 500 gained 3.11 points, or 0.13 per cent, to 2,441.32 and the Nasdaq Composite added 39.68 points, or 0.64 per cent, to 6,256.56.

Wall Street stocks dropped early Thursday after North Korea announced a plan to send missiles towards Guam, raising the stakes of a nuclear standoff with the United States.

The overall financials group, which accounts for roughly a third of the index slipped 0.9 per cent. Economists had expected prices to rise by 0.2 percent. Over the next three months, the average gain has been good but not great - +1.15%. Core prices had also been expected to climb by 0.2%.

Another source of support to bullion was data showing US producer prices unexpectedly fell in July, pointing to a further moderation in inflation that could delay a Federal Reserve interest rate increase.

"European shares are. continuing their slide on the back of ever more increasing tensions between North Korea and the U.S.", added analyst Markus Huber at City of London Markets. Pyongyang said it was examining plans for attacking Guam, a USA territory in the Pacific with a military base. North Korea, meanwhile, showed no immediate sign of dialing down its own bellicose rhetoric after Trump's warning. "The unpredictable nature of North Korea means it is hard to gauge exactly how likely an attack is. Hopefully Kim Jong Un will find another path!" The stock was the biggest decliner in the S&P 500, losing $155 to $1,893.99. Genesee & Wyoming (GWR) is posting a notable gain after reporting an increase in July traffic.

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The index was also dragged lower after Beijing ordered probes into three major Chinese social networking platforms over outlawed content.

Materials, home to gold producers and other resource-based companies, was the only gainer among the index's 10 main sectors and was up 0.6 per cent.

US stocks closed slightly lower Wednesday, making up much of the ground they lost earlier after a rare batch of earnings disappointments by Walt Disney and other big companies. The Shanghai Composite Index lost 0.2 per cent to 3,275.57 and Hong Kong's Hang Seng was off 0.3 per cent at 27,757.09.

The dollar remained under pressure, although activity was curbed by a market holiday in Tokyo. Banks and department store shares also were among the big decliners. Germany's DAX was flat, while France's CAC 40 fell 1.1 percent.

In the bond market, treasuries are extending the upward move seen over the two previous sessions. "So we're not going to get to a year-over-year number of 2-percent until some of these very low readings drop out of the statistics 6 to 10 months from now".

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