Geopolitical Concerns Lead To Initial Weakness On Wall Street
Stocks showed a notable move to the downside at the start of trading on Friday, giving back ground after showing a strong upward move in the previous session. The major averages all moved sharply lower amid renewed geopolitical concerns.
The initial weakness in the markets reflected continued concerns about rising tensions between North and South Korea as well as renewed worries about financial stability in Europe. The concerns have led some traders to move their money out of stocks and into less risky assets.
Traders are keeping a close on developments on the Korean peninsula, as North Korea has warned that planned military exercises by the U.S. and South Korea have put the region on the "brink of war."
North Korea has also reportedly conducted a series of artillery drills and warned the South that it will face a "shower of dreadful fire" if it encroaches on the North's "dignity and sovereignty even in the least."
Stocks are also moving lower amid renewed concerns about debt problems in Europe after a German newspaper reported that members of the European Union and the European Central Bank have urged Portugal to request financial aid in order to avoid a debt crisis.
While Portugal, the European Commission, and the ECB have denied the report, the story has still raised concerns about the financial stability of Europe following the recent troubles in Ireland.
Gold stocks are turning in some of the worst performances in early trading, as the price of gold has come under pressure amid some strength in the value of the U.S. dollar. With the price of gold falling by nearly $18 an ounce, the NYSE Arca Gold Bugs Index is down by 2 percent.
Most other resource stocks have also come under pressure amid a decrease in commodities prices, while brokerage, electronic storage, and housing stocks are also seeing early weakness.
The major averages have edged up off their lows for the young session in the past few minutes but remain firmly in the red. The Dow is down 95.21 points or 0.9 percent at 11,092.07, the Nasdaq is down 12.41 points or 0.5 percent at 2,530.71 and the S&P 500 is down 9.00 points or 0.8 percent at 1,189.35.