US Stocks Close Slightly Lower, Trimming Earlier Losses

Judith Bessette
Agosto 13, 2017

But despite the largest percentage drop in over a month on a global equities index, US equities ended only slightly lower as healthy corporate earnings and a recent string of strong economic data enticed investors into beaten-down stocks.

Earlier in the week, Trump said the USA would unleash "fire and fury" on North Korea if it continued to threaten the U.S. It is poised to end the week down 1.9 percent. Spot gold reached a two-month high. Several hours later, North Korea said it was considering a strike that would create "an enveloping fire" around Guam, the Pacific island where the United States stations military personnel.

Stocks in France and Germany were down more than 1 percent in early trading, while the FTSE 100 share index in London fell 0.8 percent. "It's unbelievable when you consider the headlines just how calm the equity markets are, how they've taken things in their stride", said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.

"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.

Travel website operator Priceline fell 7.26 percent, weighing the most on the S&P and the Nasdaq, following a disappointing forecast.

The pan-European FTSEurofirst 300 index lost 0.75 per cent and MSCI's gauge of stocks across the globe shed 0.40 per cent. The stock lost $4.15 to $102.83.

The Nikkei slumped to its lowest close for nearly three months on Wednesday, leading an Asia-wide sell-off sparked by President Donald Trump´s apocalyptic warning over North Korea´s weapons programme. "The typical textbook trade is that investors rush for safe haven, hence we have experienced a bounce for the gold price".

The weakness on Wall Street reflects geopolitical concerns amid a continued increase in tensions between the U.S. and North Korea.

"Gold and silver are higher, thanks mainly to their status as safe-haven commodities".

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The Canadian dollar faded 0.15 cents to 78.62 cents U.S. The greenback was down 1.1 against the franc, its worst drop in more than six weeks. The Dow Jones industrial average fell 0.17 percent, with the tech-heavy Nasdaq composite index declining 0.28 percent. Hong Kong's Hang Seng was off 0.3 percent. Japan is the world's biggest creditor country and there is an assumption investors there will repatriate funds in a crisis.

The Swiss franc was on pace for one of the largest single-day jumps against the euro since the Swiss National Bank removed its cap on the currency in January 2015.

The market's backstop safety asset, gold, edged up to its latest two-month high of $1,288 an ounce.

Yields on core government debt fell.

The CBOE Volatility Index, the most widely followed barometer of expected near-term USA stock market volatility, hit its highest mark since November 8, when Trump was elected president.

The 30-year bond last rose 28/32 in price to yield 2.7759 percent, from 2.818 percent late on Wednesday. Japan and South Korea vowed a strong reaction if the North were to go through with the plan.

On Thursday, New York Federal Reserve President William Dudley said he expects sluggish US inflation to rise over the next several months while the hot labor market gets even hotter.

U.S. crude rose 0.69 per cent to US$49.51 per barrel and Brent was last at US$52.66, up 1 per cent on the day.

Mounting tensions lifted USA defense stocks. United States gold futures gained 1.50 per cent to US$1,281.50 an ounce. Altice USA, the subsidiary of the French company, added 0.1 percent.

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