Wall Street declines on North Korea war talk and sell-off in tech shares

PUBLISHED : Tuesday, 26 September, 2017, 7:57am
UPDATED : Tuesday, 26 September, 2017, 7:57am

Wall Street dipped on Monday, as a sell-off in technology shares weighed heavily on the Nasdaq, while the most recent statement from North Korea’s to Washington added to a cautious tone.

North Korea’s foreign minister said President Donald Trump had declared war on the country and it reserved the right to take countermeasures, including shooting down US bombers even if they are not in its airspace.

The White House disputed the declaration, calling the suggestion “absurd.”

North Korea threatens to shoot down US warplanes, even outside its airspace

The comments buoyed safe-haven assets, those that are favoured by investors in times of crisis, with gold up 1 per cent and the Japanese yen strengthened 0.26 per cent versus the greenback at 111.71 per dollar.

“The North Korea narrative is not going away and the longer it remains part of the conversation, the more negative it becomes,” said Peter Kenny, senior market strategist at Global Markets Advisory Group, in New York.

The CBOE Volatility index, a widely followed measure of market anxiety, hit a two-week high of 11.21 and was last up 0.63 points at 10.22.

Tech names such as Facebook, off 4.5 per cent, Microsoft, down 1.55 per cent, and Apple, off 0.88 per cent, were among the biggest drags on the benchmark S&P 500 index.

Apple shares flirted with correction territory following a report that the company had told suppliers to scale back shipments of parts for its upcoming iPhone X.

“There has been some disappointment in the reception of Apple’s latest iPhone release, and that is driving some concern and that is bleeding through to the supply-chain names,” said Kenny.

The Dow Jones Industrial Average fell 53.84 points, or 0.24 per cent, to 22,295.75, the S&P 500 lost 5.56 points, or 0.22 per cent, to 2,496.66 and the Nasdaq Composite dropped 56.33 points, or 0.88 per cent, to 6,370.59.

The S&P technology index slid 1.42 per cent, its worst daily performance in five weeks. The index remains the best performing of the 11 major S&P sectors this year, however, with a rise of nearly 23 per cent.

The losses in tech were offset somewhat by a sharp climb in the energy sector, which gained 1.47 per cent. The sector notched its sixteenth gain in the last 18 sessions.

Oil prices hit a more than two-year high after major producers said the global market was on its way towards rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.