By Tanya Agrawal
REUTERS - U.S. stocks were lower on Wednesday afternoon as investors rushed to safe-haven assets after President Donald Trump's "fire and fury" warning to North Korea escalated tensions with the nuclear-armed nation.
North Korea said it was considering plans to fire missiles at Guam, a U.S.-held Pacific island, after President Trump's warning on Tuesday.
Trump followed his warning with a tweet on Wednesday about the strength of the American nuclear arsenal, but expressed hope it would not need to be used.
Safe-haven assets gained following the rising geopolitical tensions. Gold rose as much as 1.2 percent to a near two-month high, while the Swiss franc was on track to post its biggest single day rise in about two-and-a-half years.
Mounting tensions lifted U.S. defense stocks. Lockheed Martin, Raytheon, General Dynamics and Northrop Grumman were all up, with the Dow Jones U.S. defense index up 1.48 percent at 409.58. The index hit a life-high of 415.49 earlier.
The CBOE Volatility Index, the most widely followed barometer of expected near-term stock market volatility, was up as much as 12.63 points, its highest in more than a month.
"Geopolitics splashed cold water on the markets," said J.J. Kinahan, chief strategist at TD Ameritrade.
"There's uncertainty and caution as investors nervously eye the next foreign policy moves."
At 12:28 p.m. ET (1628 GMT), the Dow Jones Industrial Average was down 52.87 points, or 0.24 percent, at 22,032.47, the S&P 500 was down 2.8 points, or 0.11 percent, at 2,472.12.
The Nasdaq Composite was down 16.88 points, or 0.26 percent, at 6,353.58.
Trump's comments sparked a late afternoon selling on Tuesday, with the Dow ending a nine-day streak of closing records.
U.S. trading volume has been low with summer setting in and Congress expected to be in recess until Sept. 5. The S&P hasn't moved more than 0.5 percent in one day since July and has fallen more than 1 percent only twice this year.
"Despite all this, there's no reason to press the panic button. For now, the North Korea situation bears watching as there's lots of tough talk, but we'll see if it escalates," said Kinahan.
Eight of the 11 major S&P sectors were lower, with the consumer discretionary index's 0.59 percent fall leading the decliners.
Shares of Walt Disney were down 4.23 percent, the biggest drag on Dow, as investors doubted whether the company can succeed with its plan to launch its own streaming services rather than rely on Netflix to reach online viewers. Netflix was down 1.8 percent.
Travel website operator Priceline fell 7.26 percent, weighing the most on the S&P and the Nasdaq, following a disappointing forecast. Travel-review website operator TripAdvisor was down 2.7 percent.
Office Depot tumbled 22.4 percent after the office supplies retailer's quarterly results came in below estimates.
Declining issues outnumbered advancers on the NYSE by 1,927 to 916. On the Nasdaq, 1,846 issues fell and 953 advanced favoring decliners.
(Reporting by Tanya Agrawal and Sruthi Shanker; Editing by Sriraj Kalluvila)
Disclaimer: No Business Standard Journalist was involved in creation of this content
