After starting the day on a high note, major equity indexes in the U.S. struggled to build on their gains as the escalating tension between North Korea and the United States forced investors to take some profits off the table heading into the weekend.
Although today’s weaker-than-expected inflation growth data from the U.S. pushed the financials lower, the technology sector was able to offset the losses as the data also pointed towards a lower probability of a Fed rate hike, which is likely to keep the cost of borrowing low. S&P’s technology index .SPLRCT gained 0.75% while the bank sub-sector .SPXBK lost 0.7%.
On the other hand, late in the session, US President Donald Trump said that they were looking very carefully at military options against North Korea, triggering another flight-to-safety. “If earnings can stay strong and interest rates remain low, investors can look beyond North Korea and continue to rally equities,” Robert Phipps, a director at Per Stirling Capital Management in Austin, told Reuters.
The S&P 500 added 3 points, or 0.12%, to close at 2,440.50, but still recorded its biggest weekly loss since early April. The Dow Jones Industrial Average gained 14.31 points, or 0.07%, to 21,858.32 and the tech-heavy Nasdaq Composite rose 39.68 points, or 0.64%, to 6,256.56.
Headlines from the U.S. session:
US Pres. Trump: Looking “very carefully” at military options against North Korea – BNO News
WTI settles near $49 after Baker Hughes rig count data
US: retail sales and FOMC minutes due next week – Danske Bank
Next week’s key data and events – ING
US Treasuries: Yields under pressure after weaker-than-expected CPI data
Goldman Sachs: Chances of a third rate hike before year-end is at 55% – Bloomberg
NY Fed: GDP Nowcast stands at 2% for Q3 of 2017
Fed’s Kashkari: Weak CPI inflation data another reason to hold off rate hikes
US CPI: Inflation pressures remain tame – Wells Fargo
Fed’s Kaplan: Healthy to begin shedding U.S. bond holdings
US – North Korea: risk aversion likely to be temporary, although bumpy – Danske Bank
US inflation misses on the downside, but price pressures will build – ING
US: CPI for all urban consumers rose 0.1% in July on a seasonally adjusted basis