Wall Street falls on ramp-up of United States tension with North Korea

S&P 500 Index

In other energy futures trading, wholesale gasoline was little changed at $1.62 a gallon, heating oil rose 2 cents to $1.65 a gallon and natural gas rose 6 cents to $2.88 per 1,000 cubic feet. The S&P 500 is set to end the week down 1.4%, its biggest weekly loss since March. Of the index's 10 main sector groups, seven finished in the red.

The Federal Reserve's hint about unwinding balance sheets, the possibility of the European Central Bank tapering stimulus and the looming debate about the USA debt ceiling in the fall challenge the market's recent performance, Mr. Baele said.

In his latest warning to North Korea, U.S. President Donald Trump said on Friday military solutions were "fully in place" and referred to American weapons as being "locked and loaded" should the nuclear-armed nation act "unwisely".

"People are concerned that a shouting match could lead to someone pressing a button", said Irwin Michael, portfolio manager at ABC Funds. Major indexes in Asia closed lower. "We do believe the trend is still up".

On average, the S&P 500 falls 5% or more every 10 weeks and the index falls 10% every 33 weeks, according to data analyzed by AllianceBernstein going back to 1928. The Russell 2000 index of smaller-company stocks gave up 13.20 points, or 0.9 percent, to 1,396.95.

Selling was broad. Declining issues outnumbered advancing ones on the NYSE 6-to-1; on Nasdaq, a 3.60-to-1 ratio favored decliners.

"It's a clear case of "risk-off" sentiment lifting the yen, as investors focus on the latest developments with North Korea", said Kumiko Ishikawa, FX market analyst at Sony Financial Holdings in Tokyo. "There was some skittishness earlier, but then some buyers stepped in".

Kathleen Brooks, research director at City Index Direct, said: "The Swiss franc is the safe haven of choice today as risk sentiment gets hit from escalating nuclear fears between the USA and North Korea".

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Markets had earlier stabilised as USA secretary of state Rex Tillerson tried to ease the tensions, saying he did not believe there is "any imminent threat" to Guam and that diplomacy would prevail.

"You'd need to see something more tangible than just rhetoric for a broader pullback", Richard Steinberg, managing director at HighTower Advisors in NY. Australia's S&P/ASX 200 edged down almost 0.1 percent.

Currency traders consolidated positions in the Japanese yen and Swiss franc, and nudged up the dollar index by unwinding some of the recent big bets on the euro.

Japanese markets were closed for a holiday, but the tense mood dragged Asian shares lower and an MSCI index of stocks across the globe .miwd00000pus was on track to post its largest weekly drop since the week before Donald Trump won the US presidential election in November.

Missile makers Raytheon and Lockheed Martin have outperformed Wall Street by nearly four per cent in recent days and the Dow Jones US defence index is at a record high and on a seven-day unbroken run of gains.

The so-called fear gauge - the CBOE Volatility Index (VIX), the most widely followed barometer of expected United States stock market volatility, hit its highest since November 8, when Mr Trump was elected president. The S&P 500 and Dow were both coming off record highs.

The 30-year bond last rose 6/32 in price to yield 2.7847 percent, from 2.794 percent late on Thursday. The 12-month rate missed forecasts too as it dipped to 1.9% from 2.0%.

Shanghai posted its biggest one-day drop since December while Seoul stocks again ended deep in negative territory and the won continued its slide against the dollar.

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