Dow drops 200 points on escalating North Korea tensions

Large retailers Macy's and Kohl's tumbled on Thursday after they reported another quarter of shrinking sales.

US stocks rose Friday but still notched their biggest weekly loss in months, as investors were shaken by disappointing earnings results and an escalation of threats between the USA and North Korea. The index, which hovered below record highs this week, has slipped more than 3 per cent since Mr Trump said on Tuesday that the U.S. would unleash "fire and fury" if Pyongyang continued to issue threats.

Trump was responding to North Korea's claim it was completing plans to fire four intermediate-range missiles over Japan to land near the U.S. Pacific territory of Guam.

The Standard & Poor's 500 index fell 24 points, or 1 percent, to 2,449 as of 2:16 p.m.

Traders took heart in a measure of US consumer prices that increased only slightly in July, pointing to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year.

Eastern time. The Dow Jones industrial average slid 125 points, or 0.6 percent, to 21,923.

Macy's shares closed down 10.2 percent and Kohl's fell nearly 6 percent as the companies continued to report a drop in quarterly same-store sales, stoking concerns that their turnarounds may still be a long way off.

Utilities closed up 0.3 per cent, while the materials sector was the S&P's biggest loser with a 0.9-per cent drop. Rival Advanced Micro Devices was also down 3.4 percent. The stock fell $1.07 to $5.17.

Investors will keenly watch appearances later on Friday by Dallas Fed boss Robert Kaplan and Minneapolis Fed President Neel Kashkari for clues on inflation and the future path of rate hikes.

Inflation has risen 1.7 percent over the past 12 months, suggesting that inflation pressures remain well under control.

In bond markets, the yield in U.S. Treasuries fell, also pressured by the lowered expectations for a Fed move.

Friday's report was the latest in a string of lackluster inflation readings, which have surprised many investors who had entered the year betting on an upsurge in economic growth and inflation.

Benchmark 10-year notes last rose 5/32 in price to yield 2.194 percent, from 2.211 percent late on Thursday.

BONDS: Bond prices rose.

After touching a more than two-month high, spot gold last added 0.1 percent to $1,287.18 an ounce.

About 6.22 billion shares changed hands on USA stock exchanges, slightly above the 6.15 billion average for the last 20 sessions.

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