U.S. equities drifted lower again on Friday as investors were spooked by comments from North Korea’s foreign minister that it considers President Trump’s Twitter taunts — “little rocket man” and all that — tantamount to a declaration of war. As a result, he claimed Pyongyang would take the initiative and reserve the right to attack American warplanes in international airspace.
The White House responded that this was absurd. But Trump himself has yet to comment on the matter.
All this, combined with a referendum vote in Northern Iraq on independence (with the threat of a military intervention by Baghdad) weighed on sentiment with large-cap technology stocks hit hardest on frothy valuations.
In the end, the Dow Jones Industrial Average lost 0.2%, the S&P 500 gave back 0.2%, the Nasdaq Composite shed 0.9% and the Russell 2000 bucked the trend to gain 0.1%. Treasury bonds strengthened on a safe haven bid, the dollar lagged, gold gained 1.3% and crude oil fell 3.1% on fears the Kurdish vote in Iraq could result in political destabilization and thus weigh on output.
Click to Enlarge Breadth was mixed, with advancers outpacing decliners 1.3 to 1 on in-line volume. Energy led the way in sympathy with crude oil’s move, rising 1.5%. Technology fell 1.4% with Netflix, Inc. (NASDAQ:NFLX) down 4.7% and Facebook Inc (NASDAQ:FB) down 4.5%.
Ross Stores, Inc. (NASDAQ:ROST) gained 3.2% after an upgrade to “overweight” at JPMorgan following meetings with management. Colgate-Palmolive Company (NYSE:CL) gained 2.5% on a Morgan Stanley upgrade. And General Motors Company (NYSE:GM) gained 2.5% on an upgrade at Deutsche Bank on optimism surrounding new tech efforts in mobility.
Sprint Corp (NYSE:S) fell 8.2% after Bloomberg reported that SoftBank, its corporate owner, is willing to accept a merger agreement with T-Mobile US Inc (NASDAQ:TMUS) at or near its current market value.
Conclusion
Click to Enlarge Safe haven assets like gold and Treasury bonds were the beneficiaries today, pushing the SPDR Gold Trust (ETF) (NYSEARCA:GLD) up off of its 50-day moving average. That maintains the yellow metal’s year-to-date performance lead over stocks and bonds.
Tech, on the other hand, suffered its worst four-day loss in three months after falling to one-month lows. AAPL has fallen in 12 of the last 15 sessions, and is down almost 10% from its record high, on embarrassing and widespread reports of tepid iPhone 8 demand and Apple Watch LTE connectivity issues. As long as tech is in the dumps, the market will have a hard slog.
The North Korean fears are also worth paying attention to as the specter of an event that precipitates the war-of-words into an actual shoot war continues to rise.
Check out Serge Berger’s Trade of the Day for Sept. 26.
Today’s Trading Landscape
To see a list of the companies reporting earnings today, click here.
For a list of this week’s economic reports due out, click here.
Tell us what you think about this article! Drop us an email at editor@investorplace.com, chat with us on Twitter at @InvestorPlace or comment on the post on Facebook. Read more about our comments policy here.
Anthony Mirhaydari is the founder of the Edge (ETFs) and Edge Pro (Options) investment advisory newsletters. Free two- and four-week trial offers have been extended to InvestorPlace readers.
