Stocks take a beating on Tuesday with massive drops in most sectors

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U.S. stocks fell on Tuesday, as the strain between North Korea and the United States of America filled Wall Street and investors with uncomfortable levels of anxiety.  The stock markets were closed on Monday due to the Labor Day holiday, but when they opened today, the Dow Jones industrial average had dropped around 250 points, with Goldman Sachs attributed for most of the losses.  The Nasdaq also dropped by 70 points, the S&P 500 dropped by more than 20 points.

Boeing also played heavily in the loss and United Technologies’ stock took a large drop after announcing a $30 billion mega-deal to buy Rockwell Collins.

The S&P 500 fell 1.1 percent, with financials leading nine sectors lower. As the threat of Hurricane Irma hitting Florida increased, insurers XL Group and Everest Re Group showed the biggest losses in the index.

Shares of Apple, Amazon, Facebook, and Alphabet all dropped, putting the Nasdaq composite at a decline of 1.5 percent.  The Nasdaq is filled with tech stocks.

A chief investment strategist at Key Private Bank had this to say about the massive declines: “It’s just hard to sit by as a rogue nation brandishes its weapons without thinking of the potential consequences.”

According to Jeff Saut, chief investment strategist at Raymond James, “North Korea’s successful hydrogen bomb explosion over the weekend” is adding to the uncertainty. “Our sense is that if there is going to be a downside feint, it should begin this week.”

Global equities, the Stoxx 600 index, initially fell 0.52 percent on Monday, and at the same time, Japanese Nikkei 225 declined 0.9 percent. Stoxx 600 continued to drop on Monday by 0.11 percent while Nikkei 225 fell another 0.6 percent.

Investors around the world also increased their investments in traditional safe-haven assets like gold and the Japanese yen. Gold futures for December delivery rose 0.9 percent to $1,342.90 per ounce, around a one-year high. The yen gained 0.9 percent against the dollar to 108.72

South Korean stocks also fell, with the iShares MSCI South Korea Capped exchange-traded fund (EWY) sliding 2.9 percent. The ETF was on track for its worst session since Aug. 10.

John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, in a noted strong unemployment data released last week: “It wasn’t an ‘all’s well that ends well’ or an ‘all clear signal’ that empowered stocks last week as much as a sense that even as some things and situations have worsened others have actually improved.”

 Possibly sparking it all was North Korea’s sixth nuclear test since 2006 and the most powerful to date. North Korea successfully tested a hydrogen bomb that can be mounted on an intercontinental ballistic missile. The threat from North Korea is so real and potentially catastrophic that it prompted an emergency meeting with White House officials on Labor Day.

Stocks posted solid gains last week even as tensions between the United States and North Korea continued to escalate. Last month, President Trump said threats out of North Korea “will be met with fire and fury.” North Korea answered that threat by launching a missile that flew over Japan before falling into the sea.

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