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Tensions in North Korea rattle markets
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U.S. stocks accelerated losses on Monday, and the Nasdaq coughed up early modest gains, following a disappointing read on domestic factory orders and a sudden drop in crude futures.
U.S. factory orders in May fell 0.8%, compared with an expected decline of 0.7% from a survey of economists polled by MarketWatch and a 0.2% decline in the prior period.
The Dow Jones Industrial Average traded off 69 points, or 0.3%, at 21,410, led lower by declines in Walt Disney Co.(DIS) , off 1.3% and Exxon Mobil Corp.(XOM), down 1.5%.
Meanwhile, the S&P 500 index was trading 5 points, or 0.2%, lower at 2,423, as a 0.2% rally in technology and consumer-discretionary shares were more than offset by 1.1% drop in energy and a 0.6% slide in consumer-discretionary stocks.
The Nasdaq Composite Index was 0.1% lower at 6,106, after showing firmer gains early in trade.
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Quincy Krosby, chief market strategist, at Prudential Financial, said market participants are keenly focused on data, given a recent spate of weaker-than-expected economic reports and sluggish inflation.
“There is a premium on data and for each data releases, analysts are looking at every morsel [of data] to see if this economy is gaining momentum,” Krosby said.
Energy weighed on the market as crude-oil prices took a sudden tumble, with West Texas Intermediate oil shed $1.62, or 3.4%, to $45.45 a barrel, setting it on track for its first loss in nine sessions
While traders were away for Independence Day, geopolitical tensions escalated ahead of the Group of 20 summit (http://www.marketwatch.com/story/white-house-says-trump-putin-to-meet-at-g-20-summit-on-friday-2017-07-04) in Germany later this week. On Tuesday, North Korea successfully launched its first ballistic missile (http://www.marketwatch.com/story/north-korea-claims-successful-test-firing-of-an-icbm-2017-07-04) capable of reaching the continental U.S.
Read:Opinion: The oldest stock-market indicator sends a fresh ‘buy’ signal (http://www.marketwatch.com/story/the-oldest-stock-market-indicator-sends-a-fresh-buy-signal-2017-07-05)
Secretary of State Rex Tillerson said the U.S. “strongly condemns” North Korea for its action. The U.S. and South Korean armies on Wednesday conducted a joint exercise (http://www.marketwatch.com/story/us-calls-for-action-after-north-korea-successfully-launches-long-range-missile-2017-07-05), firing surface-to-surface missiles into the waters off South Korea.
“The geopolitical tensions remain a major threat for the global stability and economic health, and traders would not ignore this fact, hence they would remain vigilant,” said Naeem Aslam, chief market analyst at Think Markets, in a note.
Economic docket: Factory orders for May are due at 10 a.m. Eastern Time. They are forecast to show a 0.7% drop, according to economists polled by MarketWatch.
At 2 p.m. Eastern, minutes from the Federal Reserve’s June 13-14 meeting are due. Traders will be watching for any hint on when the central bank will start to shrink its balance sheet and raise interest rates again.
“Should the [Federal Open Market Committee] minutes indicate that the Fed is indeed close to normalizing their policy further, then the dollar will trade with a positive bias towards Friday’s nonfarm payroll report,” said Konstantinos Anthis, analyst at ADS Securities, in a note.
See:Central banks have set investors up for a long, hard road back to ‘normal’ (http://www.marketwatch.com/story/investors-face-a-long-hard-road-back-to-normal-2017-06-29)
The ADP private-payrolls data, seen as a precursor to the top-tier nonfarm jobs report, has been pushed back to Thursday because of the July 4 holiday. The figures are usually released Wednesday.
The ICE Dollar Index was up 0.2% to 96.456 ahead of the Fed minutes, rising for a fourth straight session, according to FactSet data.
Stocks to watch: Shares of Vantiv Inc. (VNTV) traded 3.3% lower, after being halted, as the company announced a deal to acquire rival payments processor Worldpay Group PLC(WPG.LN), after J.P. Morgan Chase & Co. (JPM) said it wasn’t going to make a formal bid for the Worldpay (http://www.marketwatch.com/investing/stock/jpm).
Shares of Bristol-Myers Squibb Co.(BMY) climbed 1.8% after the drugmaker reported positive results for a trial with its Opdivo drug for treatment of patients with melanoma.
Energy companies were lower, tracking a sharp loss for oil prices after Russia ruled out any proposals to deepen production cuts led by the Organization of the Petroleum Exporting Countries. Shares of Chesapeake Energy Corp.(CHK) and Transocean Ltd.(RIG).
Read:Oil to rally 20% before year’s end–the case from a UBS analyst (http://www.marketwatch.com/story/ubs-analyst-is-looking-for-oil-to-rally-20-by-the-end-of-2017-2017-07-04)
Amazon.com Inc.(AMZN), Apple Inc.(AAPL), Microsoft Corp.(MSFT) eBay Inc.(EBAY) and Mattel Inc.(MAT) could be in focus on Wednesday. They were among the companies affected by a glitch Monday evening that showed their shares erroneously making major moves on popular finance sites (http://www.marketwatch.com/story/finance-sites-erroneously-show-amazon-apple-other-stocks-crashing-2017-07-03) such as Google Finance and Yahoo Finance.
Read:High-profile glitches aren’t rare–here’s how they keep rattling markets (http://www.marketwatch.com/story/high-profile-glitches-arent-rare-heres-how-they-keep-rattling-markets-2017-07-04)
Other markets: Stocks in Asia closed mainly higher (http://www.marketwatch.com/story/korean-stocks-hiccup-after-missile-test-as-other-asian-markets-gain-2017-07-03), while European markets were struggling for direction (http://www.marketwatch.com/story/european-stocks-struggle-to-rise-as-auto-makers-and-pharmas-drag-2017-07-05).
(END) Dow Jones Newswires
July 05, 2017 10:27 ET (14:27 GMT)