11, August 2017

North Korean crisis keeps equities down; CPI and FOMC speakers ahead

US equity indexes were set for a lower open on Friday, extending prior session loses on the back of downbeat economic data and an ongoing geopolitical crisis in the Korean peninsula.

On Thursday, President Trump said his initial statement on North Korea, where he assured the US will respond with “fire and fury” to any kind of threat, was maybe not tough enough.

The CBOE Volatility Index (VIX), one of nowadays’ best ways to track fear in the market, rose more than 40 percent to trade at 15.98, reaching its highest level in almost three months.

In the light of this current situation, safe-haven assets continued to gain, with gold futures adding more than two percent this week and the Swiss franc securing a 0.9 percent advance against the greenback. The yellow metal is now standing at a two-and-a-half month peak.

The Dow Jones industrial average was down more than 200 points by the closing bell to trade at 21,844.01, with Goldman Sachs leading others to the downside.

The S&P 500 plunged 1.45 percent to close at 2,438.21, with financials and information technology leading decliners. The Nasdaq composite fell 2.13 percent to 6,216.87, with FAANG stocks weighing the most on the tech-heavy benchmark.

  • Dow Jones Industrial Average: -204.69 / -0.93% / 21844.01

  • Standard & Poor’s 500: -35.81 / -1.45% / 2438.21

  • Nasdaq Composite: -135.46 / -2.13% / 6216.87

In economic news, the producer price index dropped 0.1 percent in July, while the core index, which excludes food, energy and trade, displayed a flat performance. The index, a key inflation measure, fell short from a forecasted rise of 0.1 percent.

Other data included initial jobless claims, which were up by 3,000 in the week ended August 4 to a seasonally adjusted 244,000. Analyst had estimated a 1,000 reduction.

Attention was also directed to remarks from New York Fed President William Dudley, who said the US central bank remains on track to hike interest rates for a third time this year, as well as to begin unwilling its massive $4.5 trillion balance sheet.

"Our outlook anticipates a continued moderate growth trend, with some further strengthening in the labor market and an increase in inflation over the medium term toward our objective of 2 percent," Dudley stated in prepared remarks.

Today, the release of July’s CPI at 12:30 GMT is the main focus. Traders will also keep an eye on comments by FOMC Kaplan and Kashkari as of 13:40 GMT and 15:30 GMT respectively.