Stocks Close Modestly Lower After Trump Warns North Korea

Ivan Schwartz
August 13, 2017

The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63.

Spot gold fell 0.2 percent to $1,275.10 per ounce at 0058 GMT.

South Korea's Kospi sank 1.7 per cent to 2,319.83 and Hong Kong's Hang Seng shed 1.8 per cent to 26,946.81.

Spot silver also surged 27¢ to $17.19/oz, blowing past a new two-month high.

The Dow Jones industrial average closed up 14 points, a gain of 0.07 percent, the Nasdaq composite rose almost 40 points or 0.64 percent and the S&P 500 gained 3 points or 0.13 percent.

U.S. stocks closed lower on Tuesday after a late afternoon selling spree as investors fled for safety after U.S. President Donald Trump vowed to respond aggressively to any threats from North Korea. But investors are paying close attention to Trump's North Korea warnings, including his tweet on Friday that "military solutions" are "locked and loaded".

Pyongyang said it was examining plans for attacking Guam, a US territory in the Pacific that has a USA military base.

Consumer-focused stocks, media companies and banks accounted for much of the market decline.

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Retailers' results are being keenly watched by investors to gauge the companies' strategy to counter No. 1 online retailer Amazon.com's growth.

Trump continued to ramp up the rhetoric with a post on Twitter this morning indicating that the U.S. is prepared to take military action against North Korea.

Thin liquidity could also amplify market moves, she added, with markets in Singapore closed for a public holiday, and many market participants in Japan taking time off this week ahead of a public holiday on Friday.The dollar index, which tracks the greenback against a basket of six major rivals, was almost flat on the day at 93.657, remaining above last week's 15-month low of 92.548. The Dow Jones industrials average gained 14.31 points, or 0.1 percent, to 21,858.32. Major U.S. indices had posted record highs in recent weeks.

The tech-heavy Nasdaq Composite underperformed its peers, falling 135.46 points, or 2.1%, to 6216.87.

The remarks followed a new report asserting that USA intelligence has assessed that Pyongyang has successfully produced a nuclear warhead that can fit inside its missiles. The Labor Department reported that first-time jobless claims rose modestly to 244,000 last week. The number of people quitting their jobs also dropped. The NFIB small business optimism index rose to 105.2 in July from 103.6 in June.

On Thursday, New York Fed President William Dudley said he expects sluggish United States inflation to rise over the next several months while the hot labor market gets even hotter. They are looking for confirmation the Fed is sticking with plans for a possible December interest rate hike. But U.S. Secretary of State Rex Tillerson said he did not believe there was an imminent threat.

'We do just not know what happens next with the North Korea situation, ' said BNY Mellon FX strategist Neil Mellor.

"The dollar-yen's downside is expected above 108 yen for now". The euro slid to $1.1752 from $1.1793.

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