Adding to the modest losses posted in the two previous sessions, stocks moved sharply lower over the course of the trading day on Thursday. With the sell-off on the day, the Nasdaq and the S&P 500 fell to their lowest closing levels in a month.
The major averages ended the session just off their worst levels of the day. The Dow slumped 204.69 points or 0.9 percent to 21,844.01, the Nasdaq plummeted 135.46 points or 2.1 percent to 6,216.87 and the S&P 500 tumbled 35.81 points or 1.5 percent to 2,438.21.
Geopolitical concerns continued to weigh on Wall Street amid an ongoing escalation in tensions between the U.S. and North Korea.
A statement from the North Korean military called President Donald Trump’s warning that the communist nation would face “fire and fury” if it continued its provocations a “load of nonsense.”
North Korea claimed “only absolute force” can work on someone as “bereft of reason” as Trump and detailed plans to fire a salvo of missiles into waters around the U.S. Pacific territory of Guam.
Trump further ratcheted up the rhetoric in remarks this afternoon, suggesting that his “fire and fury” comments may not have been tough enough.
“They’ve been doing this to our country for a long time, for many years, and it’s about time that somebody stuck up for the people of this country and for the people of other countries,” Trump said.
He added, “I will tell you this, North Korea better get their act together or they’re going to be in trouble like few nations ever have been in trouble in this world.”
The focus on North Korea largely overshadowed a Labor Department report showing an unexpected drop in U.S. producer prices in the month of July.
The Labor Department said its producer price index for final demand edged down by 0.1 percent in July after inching up by 0.1 percent in June. Economists had expected another 0.1 percent uptick.
Excluding food and energy prices, core producer prices still dipped by 0.1 percent in July after creeping up by 0.1 percent in June. Core prices had been expected to rise by 0.2 percent.
A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th.
The report said initial jobless claims crept up to 244,000, an increase of 3,000 from the previous week’s revised level of 241,000.
Economists had expected jobless claims to come in unchanged compared to the 240,000 originally reported for the previous week.
Sector News
Amid broad based weakness on Wall Street, biotechnology stocks turned in some of the market’s worst performances on the day. The NYSE Arca Biotechnology Index plunged by 3.4 percent to its lowest closing level in well over a month.
Cempra (CEMP) helped to lead the biotech sector lower, extending the pullback seen over the course of the previous session.
Substantial weakness was also visible among internet stocks, as reflected by the 2.8 percent slump by the Dow Jones Internet Index. The index dropped to a one-month closing low.
Within the internet sector, Synacor (SYNC) fell sharply after the internet content provider reported better than expected second quarter results but provided disappointing guidance.
Semiconductor, computer hardware, oil service, and retail stocks also saw considerable weakness, moving lower along with most of the other major sectors.
Meanwhile, gold stocks bucked the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.3 percent. The strength in the sector came as gold for December delivery jumped $10.80 to $1,290.10 an ounce.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region saw further downside during trading on Thursday. Japan’s Nikkei 225 Index edged down by 0.1 percent, while Hong Kong’s Hang Seng Index tumbled by 1.1 percent.
The major European markets also saw continued weakness on the day. While the French CAC 40 Index fell by 0.6 percent, the German DAX Index slumped by 1.1 percent and the U.K.’s FTSE 100 Index plunged by 1.4 percent.
In the bond market, treasuries extended the upward move seen in the previous session amid ongoing geopolitical concerns. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.9 basis points to 2.212 percent.
Looking Ahead
While North Korea is likely to remain in focus, a report on consumer price inflation may also attract attention on Friday, with consumer prices expected to rise by 0.2 percent in July.
On the earnings front, News Corp. (NWSA) Nordstrom (JWN), Nvidia (NVDA), and Snap (SNAP) are among the companies releasing their quarterly results the close of today’s trading.
