(Reuters) – A sharp selloff in technology stocks dragged down the Nasdaq by more than 1 percent on Monday, with North Korea’s latest warnings to Washington adding to the downbeat mood.
North Korea’s foreign minister said President Donald Trump had declared war on the country and that it reserves the right to take countermeasures, including shooting down U.S. bombers even if they are not in its airspace.
North Korean Foreign Minister Ri Yong-ho addresses the 72nd United Nations General Assembly at UN headquarters in New York, September 2017. Credit: REUTERS
The comments pushed up demand for safe-haven assets, with gold rising 0.9 percent.
“We’re certainly in a heated-up time frame,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.
The CBOE Volatility index .VIX, a widely followed measure of market anxiety, gained 1.18 points to hit a 2-week high of 10.76.
The high-flying stocks of Facebook, Amazon, Apple, Netflix and Alphabet were down between 1 percent and 5 percent, dragging down the major indexes.
“I think we’re seeing more of a rotation out of some hot-flying tech names into small-caps, some of the names that may well benefit from tax cuts,” Hogan added.
A Wall Street sign in New York. Credit: AP/Jin Lee
The S&P technology index .SPLRCT slid 1.75 percent. The index, however, has climbed 22.6 percent so far this year, far outperforming the 11.3 percent gains in the broader S&P index.
However, the energy index’s .SPNY 1.47 percent rise helped offset some losses.
Oil hit a more than two-year high after major producers said the market was on its way toward rebalancing, while Turkey threatened to cut oil flows from Iraq’s Kurdistan region toward its ports.
At 12:32 p.m. ET, the Dow Jones Industrial Average .DJI was down 92.33 points, or 0.41 percent, at 22,257.26 and the S&P 500 .SPX was down 10.22 points, or 0.41 percent, at 2,492.
The Nasdaq Composite .IXIC was down 72.76 points, or 1.13 percent, at 6,354.16 – on track for its worst single-day percentage loss since Aug. 17.
New York Federal Reserve President William Dudley’s upbeat comments on the economy reinforced the central bank’s view of gradual rate hikes.
Investors are also awaiting a speech by Fed Chief Janet Yellen on Tuesday for more guidance on the monetary policy.
General Motors (GM.N) rose 2.05 percent after Deutsche Bank upgraded the automaker’s stock to “buy”.
Allergan (AGN.N) was up 3 percent after the drugmaker authorized a $2 billion buyback of its shares and said its chief financial officer would retire.
Declining issues outnumbered advancers on the NYSE by 1,442 to 1,369. On the Nasdaq, 1,741 issues fell and 1,071 advanced.
