Source: ADVFN Newsdesk
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The major U.S. index futures are pointing to a higher opening on Friday, as some traders may look to pick up stocks at reduced levels following the pullback seen over the past few sessions. Buying interest may be somewhat subdued, however, as the ever-escalating war of words between President Donald Trump and North Korea continues to raise geopolitical concerns. After North Korea claimed Trump is “driving” the Korean peninsula to the “brink of a nuclear war,” the president responded with a tweet suggesting the U.S. is prepared to take military action against the communist nation. “Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong Un will find another path!” Trump tweeted. Adding to the modest losses posted in the two previous sessions, stocks moved sharply lower over the course of the trading day on Thursday. With the sell-off on the day, the Nasdaq and the S&P 500 fell to their lowest closing levels in a month.
The major averages ended the session just off their worst levels of the day. The Dow slumped 204.69 points or 0.9 percent to 21,844.01, the Nasdaq plummeted 135.46 points or 2.1 percent to 6,216.87 and the S&P 500 tumbled 35.81 points or 1.5 percent to 2,438.21.
Geopolitical concerns continued to weigh on Wall Street amid an ongoing escalation in tensions between the U.S. and North Korea. A statement from the North Korean military called President Donald Trump’s warning that the communist nation would face “fire and fury” if it continued its provocations a “load of nonsense.” North Korea claimed “only absolute force” can work on someone as “bereft of reason” as Trump and detailed plans to fire a salvo of missiles into waters around the U.S. Pacific territory of Guam. Trump further ratcheted up the rhetoric in remarks this afternoon, suggesting that his “fire and fury” comments may not have been tough enough.
“They’ve been doing this to our country for a long time, for many years, and it’s about time that somebody stuck up for the people of this country and for the people of other countries,” Trump said. He added, “I will tell you this, North Korea better get their act together or they’re going to be in trouble like few nations ever have been in trouble in this world.” The focus on North Korea largely overshadowed a Labor Department report showing an unexpected drop in U.S. producer prices in the month of July. The Labor Department said its producer price index for final demand edged down by 0.1 percent in July after inching up by 0.1 percent in June. Economists had expected another 0.1 percent uptick.
Excluding food and energy prices, core producer prices still dipped by 0.1 percent in July after creeping up by 0.1 percent in June. Core prices had been expected to rise by 0.2 percent. A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended August 5th. The report said initial jobless claims crept up to 244,000, an increase of 3,000 from the previous week’s revised level of 241,000. Economists had expected jobless claims to come in unchanged compared to the 240,000 originally reported for the previous week. Amid broad based weakness on Wall Street, biotechnology stocks turned in some of the market’s worst performances on the day. The NYSE Arca Biotechnology Index plunged by 3.4 percent to its lowest closing level in well over a month.
Cempra (CEMP) helped to lead the biotech sector lower, extending the pullback seen over the course of the previous session. Substantial weakness was also visible among internet stocks, as reflected by the 2.8 percent slump by the Dow Jones Internet Index. The index dropped to a one-month closing low. Within the internet sector, Synacor (SYNC) fell sharply after the internet content provider reported better than expected second quarter results but provided disappointing guidance. Semiconductor, computer hardware, oil service, and retail stocks also saw considerable weakness, moving lower along with most of the other major sectors. Meanwhile, gold stocks bucked the downtrend, driving the NYSE Arca Gold Bugs Index up by 1.3 percent. The strength in the sector came amid a jump in the price of gold.