New York: US stocks fell sharply yesterday, with the Dow slipping more than 100 points, as lackluster results from retailers Macy’s and Kohl’s added to investor nervousness over escalating tensions between the United States and North Korea.
North Korea said it was completing plans to fire four intermediate-range missiles over Japan to land near the US Pacific island territory of Guam in an unusually detailed threat.
The threat followed US President Donald Trump’s warning on Tuesday that any threats by Pyongyang would be “met with fire and fury like the world has never seen”.
Investors again sought safe-haven assets such as gold and the Swiss franc, helping gold hit a more two-month high.
“When you have a market like we have had this year, and it has been amazingly calm, and you introduce a major source of uncertainty, there is bound to be some reaction,” said Brad McMillan, chief investment officer for Commonwealth Financial.
The S&P 500 has hadn’t a single day move of more than 0.5 percent since mid-July and has fallen more than 1 percent only twice this year.
“Absent actual military action, I think the markets will realize that the rhetoric got head of the actual policy and it is time to calm down a little bit,” McMillan said.
The CBOE Volatility Index .VIX, the most widely followed barometer of expected near-term stock market volatility, rose to a near three-month high of 15.36.
Retailers’ results are being keenly watched by investors to gauge the companies’ strategy to counter No. 1 online retailer Amazon.com’s (AMZN.O) growth.
Shares of Macy’s (M.N) tumbled 8.3 percent and Kohl’s (KSS.N) 7.3 percent after the department store operators reported a drop in quarterly same-store sales that stoked concerns that their turnaround may still be a long way off.
Dillard’s (DDS.N) slumped 13 percent. At 11:03am ET (1503 GMT), the Dow Jones Industrial Average .DJI was down 110.36 points, or 0.5 percent, at 21,938.34, the S&P 500 .SPX was down 19.12 points, or 0.77 percent, at 2,454.90.
The Nasdaq Composite .IXIC was down 68.30 points, or 1.08 percent, at 6,284.03.
The decline was broad, with all the 11 major S&P indexes lower. Financials .SPSY fell the most, down about 1 percent.
Gold hit the highest levels in two months yesterday as the United States and North Korea exchanged more threats, prompting investors to buy bullion as a safe haven asset.
US gold futures for December delivery rose 0.6 percent to $1,287.30 per ounce.
The $1,279 area is a key technical level, representing a downtrend that has been in force since mid-2016 when gold surged to a two-year peak of $1,374.91.
World stocks fell for a third day yesterday and investors shifted assets into safe haven currencies the Swiss franc and yen as well as gold. Speculative positions in US gold futures remain subdued, said UBS strategist Joni Teves.
“Subdued participation this year and lean positioning suggests that market participants would have to play catch-up on a break higher,” she said in a note.
