Wall Street closes lower as geopolitical tensions resurface
Major equity indexes in the U.S. came under pressure on Monday as the market sentiment remained negative amid heightened geopolitical tensions between the U.S. and North Korea.
On Monday, North Korea’s foreign minister Ho argued that President Donald Trump had declared war on North Korea with his comments over the weekend and his country had the right to shoot down U.S. bombers even if they were not in its airspace. The CBOE Volatility index .VIX, Wall Street's fear gauge, rose to its highest level in 2-weeks as it gained more than 8% on the day.
Commenting on this development, “everyone’s waiting with a cringe on their face. We don’t want this to continue, to become a war of words and then who knows when a mistake can happen,” Jason Ware, chief investment officer at Albion Financial in Salt Lake City, Utah, told Reuters.
Technology sector took the biggest hit on Monday with Facebook and Microsoft shares dropping 4.8% and 1.8% respectively, dragging the S&P 500 Information Technology Index 1.6% lower. Despite the risk-off mood, rising crude oil prices fueled the energy sector, offsetting a portion of today's losses. After refreshing its highest level in more than five months, the barrel of West Texas Intermediate settled above the $52 handle to close the day with a gain of 3%.
The Dow Jones Industrial Average lost 52.35 points, or 0.23%, to 22,297.24, the S&P 500 dropped 5.51 points, or 0.22%, to 2,496.71 and the tech-heavy Nasdaq Composite fell 55.29 points, or 0.86%, to 6,371.63.
Headlines from the NA session:
- US dollar index rose 0.5% to a three-week high - Westpac
- Week ahead - Rabobank
- WTI climbs to the highest since April above $52.00
- Yellen to speak on 26th September (Inflation, Uncertainty, and Monetary Policy) - Nomura
- Fed's Evans: Probably takes more than a couple months to see change in inflation outlook
- Fed's Evans: Policy will still be accommodative even as Fed allows balance sheet to shrink very slowly
- Fed's Evans: Gradual, cautious approach to policy normalization is appropriate
- Pentagon: Will provide Trump options if North Korea provocations continue - Reuters
- N. Korean ForMin: Trump's comments over weekend were clearly a declaration of war
- Dallas Fed: Growth in Texas manufacturing activity holds steady
- Fed's Dudley: Temporary factors depressing US inflation are fading - LiveSquawk