Fear Index Jumps on North Korea Concerns; Dow, Nasdaq Drop Triple Digits

Gold futures surpassed a two-month high amid a massive flight to safety

Aug 10, 2017 at 4:38 PM
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The Dow Jones Industrial Average (DJIA) finished lower for the third day in a row, falling triple digits amid a sea of disappointing retailer earnings and growing tension between the U.S. and North Korea. The S&P 500 Index (SPX) and Nasdaq Composite (COMP) also fell -- the latter suffering a triple-digit drop of its own-- as President Trump said his "fire and fury" comments may not have been "tough enough," and warned that North Korea should be "very, very nervous" if it "does anything in terms of even thinking about attack" on the U.S. or its allies. Against this backdrop, the CBOE Volatility Index (VIX) -- the stock market's "fear index" -- skyrocketed for its biggest gain in nearly three months, and safe havens like gold also surged. 

Continue reading for more on today's market, including:

  • 2 ETFs in a tailspin after North Korea threats.
  • 2 stocks reaching record highs.
  • The pharma stock burning option bears.
  • Plus, the crashing construction stock; the semiconductor stock that could soar; and Adobe options traders turned bearish.

The Dow Jones Industrial Average (DJIA - 21,844.01) ended with a loss of 204.7 points, or 0.9%. Only three of the Dow's 30 stocks ended higher, led by a 1.1% rally for McDonald's. Apple paced the 27 losers, dropping 3.2%.

The S&P 500 Index (SPX - 2,438.21) lost 35.8 points, or 1.5%. The tech-heavy Nasdaq Composite (COMP - 6,216.87) lost 135.5 points, or 2.1%. Both the SPX and COMP settled below their respective 50-day averages for the first time in roughly a month.

The CBOE Volatility Index (VIX - 16.04) gained 4.9 points, or 44.4% -- its highest close since Nov. 8, the day of the U.S. presidential election.

Closing Indexes Summary August 10


NYSE & Nasdaq August 10

5 Items on Our Radar Today

  1. President Trump's relationships with GOP senators have grown increasingly strained since healthcare plans stalled. Trump tweeted "Mitch, get back to work" indirectly to Senate Majority Leader Mitch McConnell after he made a comment about Trump having "excessive expectations about how quickly things happen in the democratic process." (CNBC)
  2. Former Uber CEO Ryan Graves has stepped down from his full-time position as senior vice president of operations at the company, but stated that he will remain on the board to help hunt for a CEO. Back in 2009, Graves was hired on as the first employee of the taxi company. He will relinquish his duties in mid-September. (Bloomberg)
  3.  The construction stock that got crushed after earnings.
  4.  The semiconductor stock that could soar.
  5.  How Adobe options traders turned bearish.

Corporate Earnings Chart August 10

Unusual Options Activity August 10
Data courtesy of Trade-Alert

Commodities

Oil futures fell after Russia considered resuming its crude output, and after the Organization of the Petroleum Exporting Countries (OPEC)said oil output rose in July. September-dated crude fell 2%, or 97 cents, to settle at $48.59 a barrel.

With rising tensions between North Korea and the U.S., gold futures rallied on safe-haven demand, reaching a two-month high. December-dated gold jumped $10.90, or 0.8%, to end at $1,290.10 per ounce.
 

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