Published: Sat, August 12, 2017
Money | By Armando Alvarado

Trump on North Korea; Google scandal; Trouble at Snap

Trump on North Korea; Google scandal; Trouble at Snap

The focus on North Korea has largely overshadowed a Labor Department report showing an unexpected drop in USA producer prices in the month of July.

Markets had taken heart earlier in the day after US Secretary of State Rex Tillerson sought to play down the escalating war of words between Washington and Pyongyang.

Railroad stocks have shown a strong move to the upside on the day, driving the Dow Jones Railroads Index up by 1.3%. The index has fallen to its lowest intraday level in nearly a month. They are looking for confirmation that the Fed is sticking with plans for a possible December interest rate hike.

Losses in health care and consumer-focused companies pulled US stocks broadly lower Tuesday, snapping a 10-day winning streak for the Dow Jones industrial average.

In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

"There's not a great incentive to buy big", said Lerner of SunTrust Advisory. The S&P 500 and Dow were both coming off record highs.

The pound has slipped by 0.1 percent versus the dollar, but has gained 0.1 percent against the euro. Viacom slid 60 cents, or 1.9 percent, to $30.17.

European markets also slid in early trade after Wall Street indices suffered their biggest losses in almost three months Thursday, while the dollar struggled to recover from eight-week lows below 109 yen as investors fled to safe haven assets.

South Korea's Kospi fell more than 1%, while Japan's Nikkei 225 dipped 0.26%.

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"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay. Hong Kong's Hang Seng was off 0.3 percent.

After being undermined by strong USA data, gold reversed sharply to scale 8-week highs as tensions surrounding North Korea increased sharply.

The attraction of the franc in the face of the Korean situation, however, has pulled it back from long-term lows hit earlier this month. Germany's DAX fell 0.9 percent, while the CAC 40 in France lost 0.5 percent.

Lukman Otunuga, research analyst at FXTM, said: "Today's main focus and event risk for the USA dollar, will be the pending inflation report from the United States Federal Reserve, which should offer fresh clues on the pace of monetary tightening".

"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.

The last time the S&P closed down more than 1 percent was May 17 when it fell 1.8 percent.

Computer hardware stocks rebounded following recent weakness, with the NYSE Arca Computer Hardware Index climbing by 1.4%. The dollar notched a two-month trough on the safe-haven Japanese yen and was last down 0.3 percent at 109.99.

In bond markets, the yield on US Treasuries fell, also pressured by the lowered expectations for a Fed move. The market was waiting f or USA consumer inflation data on Friday that would offer more clues about future Fed decisions.

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