After The Close - Stocks were down across the board on Thursday, as geopolitical tensions between the United States and North Korea weighed heavily on investors’ minds. Large- and small-cap alike traded lower throughout the day, while only the utility sector managed to ring in the closing bell in positive territory. Averages among the major indexes struggled throughout the day, continuing the downward trend that began late on Tuesday afternoon, when President Trump’s comments spurred a wave of speculation regarding the country’s foreign policy. The NASDAQ shed the most value on the day, with the S&P 500 and Dow Jones Industrial Average both wrapping the day significantly lower than yesterday’s close. Breadth favored declining shares by a wide margin, outnumbering advancing issues by a more-than 6-to-1 margin.

Meanwhile, the embattled indexes received little relief from the earnings front, particularly, the retail sector, which has seen some of its bigger components slip on Thursday. Macy’s (M) and Kohl’s (KSS) both struggled after revealing their respective earnings, largely on concerns that competitive pressure from Amazon (AMZN) will remain a major headwind in the coming years. Though Macy’s announced a new marketing strategy to attract more customers online, investors were less-than-impressed with the company’s top- and bottom-line outlook.

As for oil, the commodity saw yesterday’s slight per-barrel increase erased, and then some, as OPEC raised its full-year production outlook. Ongoing efforts to reduce the global oversupply have done little to quell pressure in the industry, and U.S. crude oil lost more-than 2% of its market value. Also hurting prospects today was Russia’s indication that it will consider resuming full production in its oil fields after OPEC’s agreement expires.

So what should subscribers make of this sudden multi-day decline? The CBOE Volatility Index, which gauges investor fear, has skyrocketed since late Tuesday, surging more than 40% today alone. While the back-and-forth with North Korea has played a large role in this recent leap, we suspect traders are also concerned that further selling may be a harbinger for a broader based correction on the horizon. With valuations still near all-time highs, and meaningful progress on key economic reform initiatives still elusive, the bears may be emboldened as earnings season winds down. Still, the continuation of the Fed’s accommodative monetary policy and more evidence of fairly steady economic improvement ought to keep the bullish market intact, for now. - Robert Harrington

As of this article’s writing, the author did not hold positions in any of the companies mentioned.


12:15 PM EDT - Equities are trading sharply lower today, as traders digest the latest batch of corporate profit reports, and worry about escalating tensions with North Korea. At just past noon in New York, the Dow Jones Industrial Average is down 130 points; the broader S&P 500 Index is off 24 points; and the NASDAQ is lower by 94 points. Market breadth suggests some widespread selling, as declining issues are outnumbering advancers by a wide margin on the NYSE. All of the major equity groups are trading in negative territory, with considerable weakness in the technology and financial issues. Meanwhile, the telecom and utility shares, which offer high dividend yields, are showing more modest losses.

Elsewhere, traders received just a few economic reports this morning. Specifically, the Producer Price Index (PPI) declined 0.1%, during the month of July, where analysts had been expecting a slight increase in prices. Of note, the core reading also showed prices softening during the month. This report confirms that inflation, which is closely monitored by the Federal Reserve, has yet to become a problem, despite a stronger economy and labor market. Elsewhere, initial jobless claims for the week of August 5th, rose to 244,000, coming in a bit higher than had been anticipated. Tomorrow we will get a look at the Consumer Price Index (CPI) for the month of July.

Finally, we continue to make our way through the second-quarter earnings season. A few large retailers weighed in with their numbers this morning. Specifically, shares of Kohl’s (KSS), Macy’s (M), and Dillard’s (DDS) are all declining today. It is worth mentioning that the broader retail sector has been an area of concern lately, with traditional operators struggling to compete with the growing online marketplace.

Technically, stocks have pulled back over the past few sessions. Perhaps, the boost provided by the second-quarter earnings season is now starting to fade. Further, traders seem to be turning their attention to more global matters. - Adam Rosner

At the time of this article’s writing, the author did not have positions in any of the companies mentioned.


Before The Bell - Following another record closing high by the Dow Jones Industrial Average to start the trading week on Monday and a late reversal on Tuesday amid growing tensions with North Korea, the stock market, on an extension of those heightened geopolitical concerns yesterday morning, started the middle session of the week, notably to the downside. Of course, the threats and counter threats involving North Korea was not the only influence on Wall Street, as a disappointing revenue release from entertainment mogul Walt Disney (DIS - Free Disney Stock Report) also rattled the street and helped to push the Dow down notably to start the day. 

In all, the Dow fell back 80 points early, and the NASDAQ, under pressure from declines in several high-profile technology names, tumbled 60 points at the morning's nadir. In fact, that composite remained the large-cap's weak link throughout the morning. But it was mainly a story of growing geopolitical risk, as U.S.-North Korean relations continued to deteriorate. Leading the way lower was the consumer discretionary category, which takes in the aforementioned entertainment giant, which lost some 5% of its value in the morning. What did do well early yesterday were traditional safe havens, such as Treasuries and gold. 

Meanwhile, there was no bounce of note as the morning moved along, as all 10 of the principal equity groups were trading in the red as we approached the noon hour in New York, while losing stocks were sustaining a 2.3 to 1.0 ratio on the Big Board. Further underscoring the weak nature of the day's action to that point, the CBOE Volatility Index (VIX), widely considered the fear gauge, was up some 7%, to near 12, a one-month high. Overall, we think the market's response to the threats from North Korea seems rather muted, in part because the consensus seems to be that tensions will eventually subside.

The market's decline then moderated for a time as the afternoon got under way, with the Dow's loss narrowing to about 40 points. However, that proved to be a brief respite, and stocks soon faltered again, but not dramatically so. In truth, the stock market is a bit frothy, with P/E's up to around 20 for companies with earnings. That is high, albeit not dangerously so in this low inflationary environment. Still, if traders needed some excuse to sell, the news out of North Korea and the revenue miss at Disney were reason enough. So, stocks wilted, as the afternoon progressed, and as we moved inside two hours, the Dow was near the day's low.         

This downturn would then persist up until the final half hour, or so, with few periods of sustained buying to interrupt the downtrend. However, as the session neared its close, some selective buying took hold, enabling the larger-cap composites to notably pare the day's losses. However, the comeback did not fully encompass the smaller-cap indexes, where the Russell 2000 still ended matters off more than 13 points. As for the various equity sectors, there was only a breakeven performance by the health care group, while the other nine categories posted declines of generally half a percentage point, or less. 

Meanwhile, the day's weakness was underscored further by the ratio of losing stocks over advancing issues, which concluded at five to two on both the NYSE and the NASDAQ. Thus, even with the modicum of late buying, it was still a decidedly down day for stocks. How will the penultimate session of this week go? For clues, we look to Asia and see that stocks were down overnight on geopolitical concerns, while in Europe the markets are lower, as well. Also, oil is higher on falling U.S. stockpiles; gold is up on worries about North Korea's threats; and Treasury yields are little changed. Finally, our futures are pointing to a weaker open at this juncture.   - Harvey S. Katz 

At the time of this article’s writing, the author held positions in one or more of the companies mentioned.