Bargain Hunting Contributes To Early Strength On Wall Street

14 August, 2017, 02:31 | Author: Terri Saunders
  • U.S. Dollar Index

USA stocks closed higher on Friday as Wall Street clawed back from a sharp decline in the previous session but the market still posted a weekly loss on lingering geopolitical uncertainties.

A small rise in a measure of U.S. consumer prices pointed to benign inflation that could make the Federal Reserve cautious about raising interest rates again this year, which would be favorable to equity investors.

North Korea on Thursday outlined details for a missile strike near the USA territory of Guam, adding fuel to rising tensions with the United States.

Wall Street stocks posted their biggest declines in almost three months Thursday as President Donald Trump doubled down on his warnings to North Korea over its nuclear program.

It is "a bullish sign that the equity markets are rebounding somewhat on a Friday, in spite of the fact that investors will need to wait for two days to react to any geopolitical news that comes out over the weekend", said Robert Phipps, a director at Per Stirling Capital Management in Austin, Texas.

The Dow Jones Industrial Average fell 163 points, or 0.74%, to 21,886, the S&P 500 lost 31 points, or 1.23%, to 2,443 and the Nasdaq Composite dropped 117 points, or 1.84%, to 6,236. Wall Street was expecting more inflation.

"If earnings can stay strong and interest rates remain low investors can look beyond North Korea and continue to rally equities", Phipps said.

North Korea said it was considering plans to fire missiles at Guam, a US-held Pacific island, after President Trump's warning on Tuesday.

However, the S&P was still not far off record levels.

USA has been conducting back-channel talks with North Korea for months
I think there is still time for other measures, sanctions, diplomacy and all those kind of things", the former spy master warned. Trump's warning came after the North threatened to fire ballistic missiles over Japan towards the US Pacific island of Guam.


Gold added $16.70, or 1.3 percent, to settle at $1,279.30 an ounce. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.

The dollar fell to 109.85 yen from 110.48 yen late Tuesday.

The annual decline in prices stands at 1.7% in July, compared to 1.6 % in June, according to the index, below the 2% target of the federal Reserve.

Mylan NV was down 4.88 percent after the EpiPen maker said delays in launching key new drugs and eroding prices for generics in the United States would hurt its profitability this year and in 2018. Brent crude edged down by 0.13 percent to trade at $51.82 a barrel and USA crude shed 0.06 percent to trade at $48.56. Germany's DAX was flat, while France's CAC 40 fell 1.1 percent.

In the bond market, treasuries are extending the notable upward move seen in the previous session.

Benchmark US 10-year notes last rose 6/32 in price to yield 2.1905 percent, from 2.211 percent late on Thursday. Hong Kong's Hang Seng Index plunged by 2%, while South Korea's Kospi Index slumped by 1.7%.

Nauert says the pressure by the US and others on Pyongyang "is working".

In contrast to the USA market, global equities remained weak.

Investors on Thursday scampered to safe-haven assets such as gold and the Swiss franc, helping the precious metal hit a more two-month high. The forecast is for consumer prices in the world's biggest economy to increase by 0.2 percent over the previous month and 1.8 percent over the same month in 2016.

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