MARKET SNAPSHOT: U.S. Stocks Edge Lower As North Korea Spurs Geopolitical Unease
Dow also pressured by weakness in Walt Disney
U.S. stocks fell on Wednesday, extending a modest retreat from record levels as tension between North Korea and the U.S. added an element of geopolitical uncertainty to markets, and as high-profile companies disappointed with their quarterly results.
In the latest escalation of tensions between the Washington and Pyongyang, the isolated Asian country threatened a missile strike (http://www.marketwatch.com/story/north-korea-threatens-missile-strike-on-us-base-on-guam-2017-08-08) at U.S. territory Guam. That saber-rattling came a day after U.S. President Donald Trump said he would respond with "fire and fury like the world has never seen (http://www.marketwatch.com/story/trump-today-president-says-north-korea-faces-fire-and-fury-if-it-doesnt-halt-threats-2017-08-08)" if the country doesn't halt its threats.
The Dow Jones Industrial Average fell 44 points, or 0.2%, to 22,044. The S&P 500 index slipped 7 points to 2,468, a decline of 0.3%. The Nasdaq Composite Index lost 40 points to 6,327, a drop of 0.7%.
Read more:How Trump's threat of 'fire and fury' is rattling stock-market calm (http://www.marketwatch.com/story/how-trumps-threat-of-fire-and-fury-is-rattling-stock-market-calm-2017-08-09)
Check out:Guam's governor says 'there is no threat' but U.S. island 'will be defended' (http://www.marketwatch.com/story/guams-governor-there-is-no-threat-but-american-island-will-be-defended-2017-08-09)
The geopolitical uncertainty comes at a time when stocks have enjoyed a lengthy run upward. The Dow recently rose for 10 straight sessions, a streak that ended on Tuesday, also halting an attempt at 10 successive closes in record territory. The S&P is also within 1 percentage point of its own record, with the Nasdaq not far behind.
Recent market action has been slight, with small intraday moves and low volatility. On Monday, the S&P 500 moved in a range of just 0.2%, the third smallest range of the past 20 years, according to data from LPL Financial. Meanwhile, the CBOE Volatility index has been near all-time lows, though it rose 1 point on Wednesday, up 10% to 12.05. If investors use the geopolitical issue as an opportunity to take profits, that could amplify the size of the swing that could occur.
Related:A problem for buy-the-dip investors: no dips to buy (http://www.marketwatch.com/story/a-problem-for-buy-the-dip-investors-no-dips-to-buy-2017-08-08)
"The higher the market is, and the longer it has been since we've had a pullback, that creates a lot more room to the downside, and a lot more room for volatility to spike," said Randy Frederick, vice president of trading and derivatives for Charles Schwab. "We've had an unprecedented period of calm, and any prudent investor has seen significant gains, so any kind of tension or concern or catalyst is an opportunity to take money off the table," he said.
"No one wants to see military escalation, but we think a pullback is healthy," he said.
Adding to the Dow's weakness Walt Disney Co.(DIS), which fell 4.3% a day after the media giant announced plans to end (http://www.marketwatch.com/story/disney-details-launch-of-espn-and-disney-streaming-services-plans-end-of-netflix-deal-2017-08-08) its distribution deal with Netflix Inc.(NFLX) and launch its own ESPN and Disney streaming services. Shares in streaming giant Netflix, a major contributor to the overall market's gains this year, fell 3%.
See:Disney and Netflix was always a short-term relationship (http://www.marketwatch.com/story/disney-and-netflix-was-always-a-short-term-relationship-2017-08-08)
And read:What the ESPN streaming service will look like (http://www.marketwatch.com/story/what-the-espn-streaming-service-will-look-like-2017-08-08)
Individual movers:Priceline Group Inc.(PCLN) dropped 7%. The online travel broker late Tuesday posted quarterly earnings that topped forecasts, but bookings missed expectations (http://www.marketwatch.com/story/priceline-shares-plunge-6-on-second-quarter-results-2017-08-08). TripAdvisor Inc. shares (TRIP) shed 8.7%. The operator of travel websites reported weaker-than-expected quarterly results (http://www.marketwatch.com/story/tripadvisor-shares-fall-6-after-company-misses-quarterly-views-2017-08-08) late Tuesday.
Retailer Office Depot Inc.(ODP) plummeted 21% after it posted a quarterly profit that missed expectations (http://www.marketwatch.com/story/office-depots-profit-misses-expectations-as-sales-decline-2017-08-09).
Drugmaker Mylan NV(MYL) tumbled 4.5% after its results, while fast-food chain Wendy's Co.(WEN) rose 1.3%.
Economic news: Productivity or how many goods and services U.S. workers produce an hour rose at an annual rate of 0.9% in the second quarter (http://www.marketwatch.com/story/us-productivity-picks-up-a-bit-in-second-quarter-2017-08-09) from the prior three months, the Labor Department said Wednesday. This is up from a 0.1% rate in the first quarter.
At 10 a.m. Eastern, a June figure for wholesale inventories is due to hit.
Check out:MarketWatch's Economic Calendar (http://www.marketwatch.com/economy-politics/calendars/economic)
On the Federal Reserve front, Chicago Fed President Charles Evans is scheduled to talk with reporters about the economy and monetary policy at 1 p.m. Eastern.
Other markets:Gold futures (http://www.marketwatch.com/story/gold-gains-about-1-as-us-north-korea-tensions-grow-2017-08-09) gained 1.3% as investors moved toward safety plays, with the Swiss franc (http://www.marketwatch.com/story/dollar-slides-vs-swiss-franc-as-us-north-korea-discord-prompts-run-to-safety-2017-08-09) up 1.1%. European equities (http://www.marketwatch.com/story/european-stocks-slide-as-us-north-korea-strife-sends-haven-assets-higher-2017-08-09) traded lower, after Asian markets mostly closed with losses (http://www.marketwatch.com/story/asian-markets-retreat-as-saber-rattling-over-north-korea-intensifies-2017-08-08). Oil futures stepped up 0.6%, while a key dollar index was slightly higher.
(END) Dow Jones Newswires
August 09, 2017 09:57 ET (13:57 GMT)