Stocks traded just under the flatline on Friday, Sept. 22, as investors grappled with tension from escalating insults between the leaders of the U.S. and a nuclear-armed North Korea.
The Dow Jones Industrial Average was down 0.2%, the S&P 500 fell 0.07%, and the Nasdaq dropped 0.1%.
North Korea's foreign minister reportedly said his country may test a hydrogen bomb in the Pacific Ocean to fulfill dictator Kim Jong Un's vow to take the "highest-level" action against the United States, the Associated Press reported. Kim, in a statement, said President Donald Trump is "unfit to hold the prerogative of supreme command of a country." He also described the U.S. president as "a rogue and a gangster fond of playing with fire."
A day earlier, Trump announced that new sanctions have been levied against North Korea. A new executive order would allow the federal government to take punitive measures against individuals, banks and other companies that trade with the country, he said.
"Foreign banks will face a clear choice: do business with the United States or facilitate trade with the lawless regime in North Korea," Trump said on Thursday. "The regime can no longer count on others to facilitate its trade and banking activities."
Friday looks to be the second down day in two for markets. A sharp selloff in tech stocks and a hawkish Federal Reserve teamed up on Thursday to drag markets from recent record highs. The Dow snapped a seven-day record-breaking streak, while the S&P 500 failed to end at all-time highs for the first day in four. After a long-awaited Fed meeting, markets appeared to struggle to find direction. The next expected catalyst, earnings season, isn't expected to kick off in earnest until October.
Following the Fed's move to begin unwinding its massive balance sheet, three Fed officials will be making the rounds on Friday. San Francisco Federal Reserve Bank President John Williams was slated to be in Zurich, while Kansas City Fed President Esther George and Dallas Fed President Robert Kaplan were scheduled to speak at an oil conference in Oklahoma City.
Overall business conditions in the U.S. eased in September, tied to a weakening in services activity, according to a flash reading on PMI from Markit Economics. Manufacturing PMI rose to 53 from 52.5, in-line with estimates. Services PMI dipped to 55.1 from 56.9, missing estimates of 55.5.
Crude oil prices were holding around the flatline on Friday afternoon. Earlier, a weekly reading on drilling activity in the U.S. showed the total oil rig count fall by five to 744, according to Baker Hughes. A week earlier, the count fell by seven oil rigs. Bullish inventory data out mid-week propelled crude prices higher. West Texas Intermediate crude is set to end the week above $50 a barrel for the first time since May 19.
West Texas Intermediate crude was down 0.2% at $50.47 a barrel on Friday.
Shares of Sprint Corp. (S) and T-Mobile US Inc. (TMUS) rose on reports the two are closer to sealing a deal. The telecoms are discussing initial terms for a merger agreement that could close as soon as the end of October, insiders told Reuters. Sprint's Japanese parent company, SoftBank Group Corp. (SFTBF) , would own between 40% and 50% of the combined firm, while T-Mobile parent company Deutsche Telekom AG (DTEGY) would hold a majority stake.
Hewlett Packard Enterprise Co. (HPE) plans to cut about 10% of its staff, or at least 5,000 workers, Bloomberg reported, citing people familiar with the matter. The cuts, part of an effort to pare expenses as competition increases, are expected to start before the end of the year, the people told Bloomberg. Reductions are likely to affect workers in the U.S. and abroad, including managers, according to the Bloomberg report. HPE has about 50,000 workers.
Tech stocks were lower again, with Apple Inc. (AAPL) falling more than 1%, while Nvidia Corp. NVDA, Alphabet Inc. (GOOGL) and Facebook Inc. (FB) also declined. The Technology Select Sector SPDR ETF (XLK) slipped 0.1%.
Apple was under pressure on reports of weaker sales for its new iPhone 8. Nomura is seeing signs of weakness in preorders of the device as slower promotional activities and the launch of the company's special edition iPhone X potentially cannibalize sales.
Time Inc. (TIME) was slightly lower on Friday after forecasting weaker print and advertising revenue for its current quarter. The media company also said it was holding talks to sell a number of its assets, including Time UK, a majority stake in Essence, and Time Customer Service. The assets up for sale generated 17% of total revenue over 12 months.
In earnings news, Finish Line Inc. (FINL) jumped more than 6% after edging out profit estimates in its recent quarter. Earnings of 12 cents a share beat consensus by a penny.
Revenue came in slightly short, though: Sales dipped 3.2% to $469.4 million, missing expectations by $1.1 million. Comparable-store sales declined 4.5%. The footwear retailer expects fiscal 2018 comparable-store sales to fall between 3% and 5%.
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Updated from 12:22 p.m. ET, Friday, Sept. 22.
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