Dow Jones down 205 at 21,844
S&P 500 down 36 at 2,438
Investors seek refuge in gold
Snap plunges after the bell as new users growth rate disappoints
US benchmarks had their worst day since May as the tensions between North Korea and the US ratcheted up.
The Dow Jones 30-share index plunged 205 points to 21,844 while the broader-based S&P 500 gave up 36 points at 2,438.
It was the third day in success that the indexes had lost ground, coinciding with a series of escalating threatening statements from two volatile administrations.
Across the border in Canada things were no better, with the S&P/TSX Composite down 143 points at 15,074.
Gold looked like the safest option today, with the yellow metal hardened 15 to US$1,291.10 an ounce.
After-hours, Snap Inc (NYSE:SNAP), owner of the Snapchat app, tumbled to a new low of US$12.07 after closing in regular trading at US$13.77.
Snap attracted 7mln new daily users in the second quarter, which was well short of the 10mln the market had been expecting.
The stock only floated in March of this year and being a relatively young technology company it is, of course, losing pots of money, but an increased loss of US$443mln versus a loss of US$116mln a year earlier was a concern for the stock's diminishing band of fans.
Mid-session: Vix volatility index heads north
Losses lengthened after the opening as investors pulled money out of the equity market and moved into safer assets, such as gold.
The Dow Jones industrial average was off 145 points (0.7%) at 21,903 while the broader-based S&P 500 was down 25 (1.0%) at 2,449.
Meanwhile, the price of gold rose US$11.30, or 0.9%, to US$1,290.80 an ounce.
“The VIX volatility index spiked above 15 to reach its highest since May before easing back a touch. Meanwhile, the S&P 500 summer holiday may be over as it is set to break out of an incredibly narrow trading range,” suggested Neil Wilson at ETX Capital.
“Gold continues to be bid and firmed on more haven appeal and the bulls may well push it up to $1,300 with the wind behind it as risk is taken off the table. It’s twice attempted to breach $1,300 this year – in mid-April and at the start of June - third time lucky maybe,”he wondered.
Arcadia Biosciences Inc (NASDAQ:RKDA) defied the trend, surging 26% to US$0.523 as Verdeca, its joint venture with Bioceres, received notification that the US Food and Drug Administration (FDA) has completed its full review of the company's safety evaluation for HB4 soybeans.
The FDA has given the green light for products derived from HB4 soybeans to be used commercially in human and animal feed.
The share price of Forterra Inc (NASDAQ:FRTA) halved as the manufacturer of water and drainage infrastructure pipe and products blamed the weather for a poor set of quarterly results.
It reported a net loss of US$11.2mln versus a profit of US$36.7mln in the corresponding period of 2016, as the company's operations were affected by Tropical Storm Cindy, excessive rainfall events around the country and a decline in average sales prices of products sold.
Open: North Korea tensions prompt "risk off" mood
The good news is that the USA and North Korea are not at war, but the war of words continues.
Stocks opened lower, with the S&P 500 down 17 points, or 0.7%, at 2,457 and the Dow Jones 116 points lower (0.5%) at 21,933.
“Traders are on red alert as the mention of war has sent them running for cover. In tense situation like this, equity markets are move lower exceptionally fast, and investors don’t want to be caught on the wrong side of the markets, so they are getting out now,” noted David Madden of spread betting firm CMC Markets.
“Traders would require nerves of steel to starting buying into the stock market now, given stand-off between the US and North Korea,” he added.
Sentiment should have been helped by the producer price index (PPI) coming in well below expectations, suggesting, according to the economics unit of Dutch finance house ING, that there is little need for imminent additional policy tightening.
“The US PPI report for July is surprisingly low, falling 0.1% MoM (consensus was looking for a 0.1% rise), which brings the YoY rate down to 1.9% from 2%. The market and ourselves had been looking for 2.2% or 2.3%YoY reading,” ING said.
“Today’s softer outcome suggests some downside risk for tomorrow's CPI [consumer prices] report, but with the economy growing reasonably and creating jobs in significant numbers, coupled with the factors we cited regarding PPI mean we still think inflation pressures will pick-up over coming months,” the bank's chief international economist, James Knightley, said.
Last week's first-time jobless claims rose 3,000 to 244,000, which was a couple of thousand higher than the market had been expecting.
On the corporate front, engineering firm Babcock & Wilcox Enterprises Inc's (NYSE:BW) share price more than halved on the back of its second quarter numbers.
Revenues fell 8.7% to US$3498mln from the year before. Adjusted earnings per share were negative after the company took a US$115.2mln charge arising from unexpected cost and scheduling issues in the renewable segment.
The loss per share was US$2.56, versus an adjusted loss per share of 17 cents a year earlier.
Food delivery outfit Blue Apron Holdings Inc (NYSE:APRN) revealed stronger than expected second quarter revenue, but still saw its shares dive.
READ Blue Apron boosted by better-than-expected second quarter
The meal-kit group, however, revealed a 9% drop in quarter-on-quarter customer numbers – at 943,000 versus 1mln – though spend per customer was up to US$251 from US$236.
With investors already worried by Amazon's entry into this market, the shares fell 13.3% to US$5.41.