S&P falls 1.4 pct in safety flight on N. Korea tensions

Ivan Schwartz
August 13, 2017

South Korea's fell 1.7 percent to its lowest since May 24, but its losses for the week are a relatively modest 3.2 percent.

Trump suggested in remarks on Thursday that his comments threatening North Korea with "fire and fury" may not have been tough enough.

An Associated Press report that the US and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats may also help to soothe jitters.

A small rise in a measure of USA consumer prices pointed to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year, which would be favorable to equity investors.

The Standard & Poor's 500 index rose 5 points, or 0.2 percent, to 2,444 as of 12:28 p.m.

The pan-European FTSEurofirst 300 index lost 1.06 percent and MSCI's gauge of stocks across the globe shed 0.17 percent.

The markets may benefit from bargain hunting, as some traders look to pick up stocks at reduced levels following the pullback seen over the past few sessions.

THE QUOTE: "Today's inflation data put the Fed on pause and really diminishes the fact that there's still some noise going around with the North Korea-U.S. situation", said Phil Blancato, CEO of Ladenburg Thalmann Asset Management. The Federal Reserve is likely to scale back on its expected pace of interest rate hikes if inflation continues to be soft.

Following the sell-off seen in the previous session, stocks may regain some ground in early trading on Friday.

The Labor Department said consumer prices edged up 0.1% in July following no gain in June.

Macy's dropped 4.2 percent as it reported second-quarter revenues fell 5.4 percent to $5.6 billion, another sign of the travails facing department stores.

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The dollar index fell 0.32 percent, with the euro up 0.42 percent to $1.1819.

Retailers Wal-Mart (WMT), Home Depot (HD), Target (TGT), Staples (SPLS), and Gap (GPS) are also among the companies due to report their quarterly results next week.

Biotechnology, tobacco, and transportation stocks also saw considerable strength, while steel stocks extended a recent move to the downside. Brent crude, used to price worldwide oils, was down 35 cents to $51.55 a barrel in London.

On the currency front, the US dollar is trading at 108.82 yen compared to the 109.20 yen it fetched at the close of NY trading on Thursday.

CURRENCIES: The dollar slipped to 109.04 yen from 109.26 late Thursday.

Benchmark U.S. 10-year notes last rose 6/32 in price to yield 2.1905 percent, from 2.211 percent late on Thursday.

MARKETS OVERSEAS: Major indexes in Europe were mixed.

Sterling was last trading at $1.3007, up 0.25 percent on the day. Britain's FTSE 100 was down 1.1 percent.

Shares of Snapchat parent Snap Inc.(SNAP) slid 11% a day after the company's earnings missed forecasts (http://www.marketwatch.com/story/snap-ceos-promise-cant-overcome-declining-ad-rates-stock-heads-toward-new-lows-after-earnings-2017-08-10), and the social-messaging company disclosed that average ad prices fell in the second quarter. Australia's S&P/ASX 200 dropped 1.2 percent.

Asian markets swooned from the opening bell, and closed in the red.

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