NEW YORK: U.S. stocks clawed back losses late on Wednesday as investors appeared to brush off geopolitical concerns after falling in the wake of U.S. President Donald Trump's "fire and fury" warning to North Korea.
Bargain-seeking investors instead turned their focus to strength in the global economy and earnings toward the end of an active trading day.
"It's amazing when you consider the headlines just how calm the equity markets are, how they've taken things in their stride," said Ryan Detrick, senior market strategist at LPL Financial in Charlotte, North Carolina.
"There was some skittishness earlier but then some buyers stepped in," he said.
Investors had rushed to safe-haven assets after strongly worded exchanges between Washington and nuclear-armed North Korea late on Tuesday. U.S. Secretary of State Rex Tillerson said he did not believe there was an imminent threat.
"You'd need to see something more tangible than just rhetoric for a broader pullback," said Richard Steinberg, managing director at HSW Advisors, a finance team within HighTower Advisors, in New York.
After a dip of as much as 0.52 percent earlier in the day, Wall Street's three major indexes bounced off intraday lows.
The Dow Jones Industrial Average fell 36.64 points, or 0.17 percent, to end at 22,048.7, the S&P 500 lost 0.9 point, or 0.04 percent, to 2,474.02 and the Nasdaq Composite dropped 18.13 points, or 0.28 percent, to 6,352.33.
While gold <XAU=>, a safe-haven favorite, pared some gains, it was last up 1.2 percent, at around its highest since mid-June. The Swiss franc <CHF=> and the Japanese yen <JPY=> also rose.
Politics lifted U.S. defense stocks. Lockheed Martin <LMT.N>, Raytheon <RTN.N>, General Dynamics <GD.N> and Northrop Grumman <NOC.N> all rose and the Dow Jones U.S. defense index <.DJUSDN> was up 1.6 percent after hitting a record high.
The CBOE Volatility Index <.VIX>, the most widely followed barometer of expected near-term stock market volatility, ended at a session low of 11.11 after rising as high as 12.63.
Six of the S&P 500 sectors ended higher. The consumer discretionary index <.SPLRCD> was one of its biggest losers with a 0.47 percent drop. Its biggest drags were Priceline <PCLN.O> and Walt Disney <DIS.N>.
Disney shares closed down 3.9 percent as investors were skeptical of its plan to launch streaming services rather than rely on Netflix <NFLX.O>.
Travel website operator Priceline Group Inc <PCLN.O> fell 6.9 percent after a disappointing financial forecast.
After the bell, Twenty-First Century Fox <FOXA.O> shares were up 0.7 percent following the release of its results.
Declining issues outnumbered advancing ones on the NYSE by a 2.29-to-1 ratio; on Nasdaq, a 2.47-to-1 ratio favored decliners.
About 6.48 billion shares changed hands on U.S. exchanges on Wednesday compared with the 6.16 billion average for the last 20 sessions.
Reuters alo reported that The pan-European FTSEurofirst 300 index <.FTEU3> lost 0.75 percent and MSCI's gauge of stocks across the globe <.MIWD00000PUS> shed 0.33 percent.
Emerging market stocks lost 0.89 percent. MSCI's broadest index of Asia-Pacific shares outside Japan <.MIAPJ0000PUS> closed 0.57 percent lower, while Japan's Nikkei <.N225> percent.
Traditional safe-haven currencies including the Swiss franc and Japanese yen rose against the U.S. dollar.
"Obviously we are looking at the increased tensions between the U.S. and North Korea," said Brad Bechtel, managing director FX at Jefferies in New York. "Tensions are still high and not going away at the moment. Safe-havens are bid and markets are a little uneasy."
South Korea's won <KRW=KFTC> dropped 0.9 percent against the U.S. dollar to its lowest close since July 13.
The Swiss franc rose 0.01 percent versus the greenback, the most since late June, at 0.96 per dollar.
The dollar index <.DXY> fell 0.14 percent, with the euro <EUR=> unchanged at $1.1757.
The Japanese yen strengthened 0.08 percent versus the greenback at 110.00 per dollar. Japan is the world's biggest creditor country and there is an assumption that investors there will repatriate funds in a crisis.
Sterling <GBP=> was last trading at $1.3006, up 0.02 percent on the day.
The Swiss franc was on track for its biggest daily gain against the euro since the Swiss National Bank removed its cap on the currency in January 2015. It was last up 0.0 percent at 1.1329 per euro <EURCHF=>.
Yields on core government debt fell.
Benchmark U.S. 10-year notes <US10YT=RR> rose 9/32 in price to yield 2.2494 percent, from 2.282 percent late on Tuesday.
The 30-year Treasury bond <US30YT=RR> rose 27/32 in price to yield 2.8252 percent, from 2.867 percent late on Tuesday.
"The most visible impact of escalating verbal threats between North Korea and President Trump comes at the long end of the U.S. Treasury curve," said Jim Vogel, interest rates strategist at FTN Financial in Memphis.
Oil prices rose after a report showed U.S. refineries processed record amounts of crude in the latest week, eating into inventories.
U.S. crude <CLcv1> rose 1.08 percent to $49.70 per barrel and Brent <LCOcv1> was last at $52.78, up 1.23 percent on the day.
Gold hit its highest level in almost two months after Trump added to the geopolitical anxiety by boasting of the strength of the U.S. nuclear arsenal.
Spot gold <XAU=> added 1.3 percent to $1,277.15 an ounce. U.S. gold futures <GCcv1> gained 1.63 percent to $1,283.20 an ounce.
Copper <CMCU3> lost 0.39 percent to $6,455.00 a tonne. - Reuters- Reuters