Updated from 12:38 p.m. ET, Friday, Aug. 11.
Stocks moved higher on Friday, Aug. 11, although the pain of a three-day selloff triggered by North Korea threats still lingered. The Dow Jones Industrial Average was up 0.22%, the S&P 500 gained 0.32%, and the Nasdaq added 0.77%.
Still, the main indexes have not yet recouped losses sustained over a three-day stretch of red ink earlier this week. The S&P 500 sank 1.7% from Tuesday to Thursday, the Dow fell 1.1%, and the Nasdaq dropped 2.4%. Those losses put the S&P 500 on track to close with a weekly decline of 1.4%, its worst such showing since the week ended March 24.
Global markets have been on edge since Tuesday, when President Trump warned North Korea of severe retribution should the authoritarian state proceed with any more missile tests or threats. Trump said that further threats would be met with "fire and fury like the world has never seen." He doubled down on those remarks on Thursday, suggesting that perhaps his rhetoric wasn't harsh enough. And in a Friday morning tweet, Trump wrote: "Military solutions are now fully in place, locked and loaded, should North Korea act unwisely. Hopefully Kim Jong-un will find another path!"
Trump's threats have escalated since reports broke at the beginning of the week that North Korea had successfully produced a nuclear warhead that could be fitted inside its missiles. The U.N. Security Council unanimously voted on Saturday, Aug. 5, to impose new sanctions on North Korea after Pyongyang conducted several missile tests. North Korea has since threatened to launch missiles at the U.S. territory of Guam, and the country previously threatened "all-out war, wiping out all the strongholds of enemies, including the U.S. mainland."
Tom Elliott, international investment strategist at deVere Group said that "in all likelihood, the North Korea problem will persist for years to come, with the U.S. and increasingly China attempting to contain and restrain Kim Jong-un. He knows that any use of missiles -- nuclear-tipped or not -- against the U.S or one of its Asian allies, risks a retaliation that will lead to the end of his family's rule of the country. Therefore, there is a high probability that the current tension will ease off and the recent flight into defensive stocks will reverse."
Among individual stocks, J.C. Penney Co. Inc. (JCP) tanked 17% after reporting a far worse quarter than expected. JCP's net loss of 20 cents a share was 2 cents deeper than a year earlier. An adjusted loss of 9 cents a share also came in double analysts' consensus. Penney's $2.96 billion of sales did exceed analysts' $2.84 billion estimates, but same-store sales declined by 1.3%. For the full year, J.C. Penney reiterated adjusted earnings guidance of 40 cents to 65 cents a share, wrapping estimates of 49 cents.
Meanwhile, Snap Inc. (SNAP) tumbled 11% after posting a deeper-than-anticipated loss and weaker user numbers over its second quarter. The messaging-app company reported a net loss of $443.1 million, far wider than $115.9 million a year earlier. On a per-share basis, a net loss of 16 cents a share came in deeper than consensus by 2 cents. Revenues rocketed 153% higher to $181.7 million, yet still came in short of estimates by $5.13 million. Average revenue per user more than doubled to $1.05, up from 50 cents a year earlier. That also missed estimates of $1.07.
Snap had 173 million daily users during the quarter, a 4% increase from last year's quarter, while analysts were hoping for 175 million users. User growth slowed quarter-over-quarter, too, as 7.3 million new users were added to the platform compared with 8 million during the first quarter.
Among other techs, record second-quarter earnings and revenue from Nvidia Corp. (NVDA) weren't enough to prop the stock up Friday. The chipmaker's shares fell more than 5% despite NVDA earning $1.01 a share, higher than the consensus of 70 cents a share and the eighth-straight quarter of better-than-expected earnings. Nvidia's sales rose 56% to $2.23 billion, exceeding estimates of $1.96 billion. Gaming revenues also increased 52% to nearly $1.2 billion, with games such as the Call of Duty and Star Wars franchises contributing a healthy boost to the top line.
Elsewhere in the market, Nordstrom Inc. (JWN) declined even after exceeding profit and sales forecasts over its recent quarter. The department-store chain reported earnings of $110 million, or 65 cents a share. That was lower than a year earlier when Nordstrom had reported $117 million, or 67 cents. Analysts had anticipated 64 cents a share in profit. Revenue increased 3.8% to $3.79 billion, beating consensus by $40 million. Same-store sales were a particular bright spot. That measure increased 1.7%, a surprise to analysts looking for a 0.5% drop. Nordstrom also bumped up its full-year earnings to between $2.85 and $3, raising forecasts on the low end by a dime.
Lastly, Blue Apron Inc. (APRN) declined by 1% after SunTrust Robinson Humphrey downgraded the stock to "Hold" from "Buy." SunTrust analysts wrote that "we opt to move to the sidelines given a lack of visibility on timing for a full recovery and costs associated with the effort."
Blue Apron has been falling since Thursday after reporting earnings for the first time since going public on June 29. The meal-kit company posted a steeper-than-consensus loss as the number of customers declined. Blue Apron also reported delays at its Linden, N.J., factory.
In other markets, oil prices were sharply lower after the International Energy Agency commented that some Organization of Petroleum Exporting Countries members were compromising a pact to limit production in order to balance supply.
West Texas Intermediate crude was higher on Friday, though worries over oversupply persisted. The Paris-based International Energy Agency said in its regular Monthly Oil Market Report that there would be "more confidence that rebalancing is here to stay if some producers party to the output agreements were not, just as they are gaining the upper hand, showing signs of weakening their resolve." OPEC's combined production increased by 173,000 barrels per day to nearly 32.9 million barrels in July.
The IEA also raised its global oil-demand forecast. The group anticipates demand will rise by 1.5 million barrels a day -- higher than the 1.4 million increase forecast last month. The IEA said "producers should find encouragement from demand, which is growing year-on-year more strongly than first thought."
A weekly read showed U.S. rigs drilling for oil increased by 3 to 768 in the past week, according to Baker Hughes. Domestic drilling activity had fallen by one in the previous week.
In economic news, U.S. inflation trends remained soft in July, with consumer prices coming in weaker than expected. The Labor Department reported that consumer prices increased 0.1% in July, half the anticipated increase. Core prices, excluding food and energy also rose 0.1%, though at a slower-than-forecast pace. Consumer prices over the past 12 months have risen 1.7%. On Thursday, Labor said the July Producer Price Index unexpectedly declined. Soft inflation could give the Federal Reserve pause in its path to tighter monetary policy.
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