North Korea Threat Casts an Ominous Cloud -- Here's Where Wall Street Stands

Dow Jones Industrial Average

July's 0.1 percent increase in consumer prices suggests that the Federal Reserve may be less likely to raise interest rates next month.

Reuters data show a 22 percent perceived chance for a rate hike after the Fed's December meeting.

The FTSE 100 index closed at a three-month low last night as concern about geopolitical tension continued to put world stock markets under pressure.

Trump said his earlier threat to unleash "fire and fury" on Pyongyang may not have been tough enough, after North Korea's state run news agency said earlier it would complete plans in mid-August to fire four missiles to land near Guam.

After hurrying to sell off richly-valued stocks this week, investors appeared to be reassessing the geopolitical risks, according to Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

The S&P 500 index had its biggest one-day drop in nearly three months on Thursday as investors fled riskier assets, with technology stocks leading the charge, in response to an increasingly aggressive exchange of threats between the United States and North Korea. The Dow Jones industrials average gained 14.31 points, or 0.1 percent, to 21,858.32.

On the currency markets, the pound was up 0.03% against the dollar at $1.2981 but down 0.23% against the euro at 1.0999 euros. It has fallen more than 1 percent on only three days this year.

Computer hardware stocks have shown a strong move to the upside on the day, driving the NYSE Arca Computer Hardware Index up by 1.5%.

A Reuters Datastream index of more than 7,000 stocks across the globe saw its market capitalization drop from a record high $61.36 trillion on Monday to $60.43 trillion at the close on Thursday.

Despite the drop, analysts said the market seemed to be a bit skeptical that the North Korea situation would grow into a major crisis, noting that the losses were still not that deep.


Shares of Kohl's were down 8.4%, while Macy's fell 4% after the department store operators reported a fall in sales.

US stocks closed slightly lower Wednesday, making up much of the ground they lost earlier following a rare batch of earnings disappointments by Walt Disney and other big companies.

"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY.

Six of the 11 major S&P sectors were higher, with technology's 0.80-percent rise leading the advancers.

In the bond market, treasuries are extending the notable upward move seen in the previous session.

Even so, Wall Street remains near record highs.

In Europe, Britain's FTSE100 was down over one percent, Germany's DAX traded 0.5 percent lower, while the French CAC40 index was 0.62 percent in the red, as of 9:00am GMT.

Investors instead turned to safe-haven assets such as gold, pushing it to a two-month high, and the Japanese yen rose.

In economic news, second-quarter Singapore GDP growth was revised upwards to 2.2 percent compared to the previous quarter, above an earlier estimate of 0.4 percent growth.

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