Investing.com – U.S. stocks closed lower as geopolitical tensions escalated after President Donald Trump said his warning of bringing “fire and fury” to North Korea may not have gone far enough to curb the isolated nation from developing its nuclear and missiles programmes.
"If anything, maybe that statement wasn't tough enough," Trump told reporters at his New Jersey golf club.
"I'll tell you why, and they should be very nervous. Because things will happen to them like they never thought possible." Trump said of North Korea’s threat that it was carefully examining a plan to strike Guam, where a U.S. military base is located.
The uptick in geopolitical tensions sparked risk off sentiment, lifting the Volatility Index (VIX), widely considered the best gauge of fear in the market, more than 40% to trade at 15.58.
Meanwhile, a pair of disappointing economic reports on jobs and inflation also weighed on sentiment, weakening the case for third rate hike later this year.
The producer-price index fell 0.1% in July, the Labor Department said Thursday, the first drop since last August. The core rate, which excludes volatile categories of food, energy and trade, was flat in the month.
Meanwhile, initial claims for state unemployment benefits increased 3,000 to a seasonally adjusted 244,000 for the week ended August 5, the Labor Department said on Thursday.
Economists had forecast claims falling to 240,000.
On the corporate earnings front, Kohl’s Corporation (NYSE:KSS) and Macy’s Inc (NYSE:M) both reported better-than-expected quarterly results, but the latter crashed 10% as forward guidance on sales and earnings-per-share undershot expectations.
The Dow Jones Industrial Average closed lower at 21,884.01. The S&P 500 traded 1.35% lower while the Nasdaq Composite fell to 2.17%.
‘Bulls and Bears’ on Wall Street
The top Dow gainers for the session: Perrigo Co (NYSE:PRGO) up 1.1.%, Coca-Cola Company (NYSE:KO) up 0.3% and International Business Machines (NYSE:IBM) up 0.1%
Apple Inc (NASDAQ:AAPL) down 3.4%, Goldman Sachs Group Inc (NYSE:GS) down 2.4% and Cisco Systems Inc (NASDAQ:CSCO) down 2%, were among the worst Dow performers of the session.