North Korea Has Markets Nervous But Not Panicked

A street sign for Wall Street is seen outside the New York Stock Exchange in Manhattan New York City

A street sign for Wall Street is seen outside the New York Stock Exchange in Manhattan New York City

But for the week the S&P 500 lost 1.3 percent, its worst weekly showing since March.

The Dow Jones industrial average (Dow Jones Global Indexes:.DJI) closed 14.31 points higher at 21,858.32 after briefly dipping into negatively territory, with Apple (AAPL) contributing the most gains. That's a much steeper drop than the ones experienced by the Dow and S&P 500.

Even so, Wall Street remains near record highs.

A Labor Department report showed its producer price index posted a surprise drop in July, down 0.1% for the largest slide in nearly a year. Economists had expected prices to rise by 0.2%. "When you're due, there's always going to be something that happens in the world that's going to make people nervous", Matthew Peterson, chief wealth strategist for LPL Financial in Charlotte, North Carolina, told Reuters.

On Thursday, in response to North Korea's threat to fire missiles at American targets in the Pacific, President Trump said that if Pyongyang "does something in Guam, it will be an event the likes of which nobody has seen before - what will happen in North Korea".

The tensions, since Trump's "fire and fury" comments on Tuesday, have wiped out almost $1 trillion from the global equity markets. "It was triggered by the geopolitical concerns surrounding North Korea and the valuation levels are high ".

However, an Associated Press report that the US and North Korea have been engaged in back channel talks (https://apnews.com/686ac7c761694b28b67793a1d8297145?link=mktw) for several months even as they exchange incendiary threats helped to soothe some of the jitters.

"Military solutions are now fully in place, locked and loaded, should North Korea act unwisely". Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover.

The Swiss franc reversed a two-week losing streak and gained 1.1 per cent to as firm as 0.9611 per dollar.

MARKETS OVERSEAS: Major indexes in Europe were headed lower.

The technology sector was the S&P's biggest drag with a 2.2 percent drop.

Biotechnology, tobacco, and transportation stocks also saw considerable strength, while steel stocks extended a recent move to the downside.

Asian markets sank across the board again Friday.

United States stocks ended lower on Thursday, and Asian markets fell sharply, with Hong Kong's Hang Seng index dropping 2%.

The UK's FTSE 100 index fell 66.36 points, or 0.9%, to 7,323.58 in early trade, having dropped 1.4% on Thursday.

The yield on the benchmark 10-year Treasury note settled at 2.191%, its lowest close since June 26, compared with 2.211% Thursday and 2.269% last Friday.

The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which may shed some light on the outlook for the interest rates.

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