Tensions Between U.S./North Korea May Generate Continued Selling Pressure

The major U.S. index futures are pointing to a lower opening on Thursday, with stocks likely to extend the pullback seen over the two previous sessions. Geopolitical concerns may continue to weigh on Wall Street amid a continued escalation in tensions between the U.S. and North Korea.

A statement from the North Korean military called President Donald Trump’s warning that the communist nation would face “fire and fury” if it continued its provocations a “load of nonsense.”

North Korea claimed “only absolute force” can work on someone as “bereft of reason” as Trump and detailed plans to fire a salvo of missiles into waters around the U.S. Pacific territory of Guam.

The rhetoric between the U.S. and North Korea has continued to heat up, leading traders to look to safe havens such as gold and treasuries.

After ending Tuesday’s trading modestly lower, stocks saw continued weakness during trading on Wednesday. Selling pressure was somewhat subdued, however, limiting the downside for the major averages.

The major averages climbed well off their worst levels of the day but still closed in the red. The Dow dipped 36.64 points or 0.2 percent to 22,048.70, the Nasdaq fell 18.13 points or 0.3 percent to 6,352.33 and the S&P 500 edged down 0.90 points or less than a tenth of a percent to 2,474.02.

The weakness on Wall Street reflected geopolitical concerns amid a continued increase in tensions between the U.S. and North Korea.

The lower close on Tuesday came on the heels of remarks by President Donald Trump warning North Korea against making further threats.

Trump told reporters further threats from North Korea would be “met with fire, fury and frankly power the likes of which this world has never seen before.”

North Korea seemed unfazed by the president’s bluster, however, as state media carried a statement indicating the communist nation is “carefully examining” a plan to strike the U.S. Pacific territory of Guam.

The back-and-forth came on the heels of reports the U.S. intelligence community has determined North Korea has successfully produced a miniaturized nuclear warhead that can fit inside its missiles.

A notable decline by Disney (DIS) weighed on the Dow, with the entertainment giant slumping by 3.9 percent on the day. The drop by Disney came after the company reported fiscal third quarter earnings that came in above estimates but on weaker than expected revenues.

On the U.S. economic front, the Labor Department released a report showing labor productivity increased…

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