Wall Street Recovers From Overnight Sell-Off as Supports Remain Intact

With the aid of strong technical support in the Dow and S&P 500 as well as investor sentiment that the situation in North Korea won’t immediately escalate into war, the major benchmark averages bounced off their opening lows to trade unchanged to slightly higher at midday on Monday.

The blue chip index is straddling the flat-line with gainers and decliners evenly matched, while the Nasdaq Composite climbed back into positive territory after trading significantly lower at the open.

Global equity markets were roiled late Monday after North Korea fired a missile over the Japanese island of Hokkaido, triggering warnings from the U.S. that “all options are open” and fueling a flight-to-safety from equity assets into safe-havens. The defensive tone was exacerbated by worsening conditions in Texas from Hurricane Harvey and the likelihood that the storm will rotate into Louisiana and dump another 15 inches of rain. Gas futures continued to rally while West Texas intermediate crude oil futures fell another 1.3%.

U.S. equities opened lower but selling stalled at the 50-day moving average in the Dow and 100-day moving average in the S&P 500. As Wall Street reassessed the immediate risk of a retaliatory move against Pyongyang by the U.S., investors pivoted out of gold and U.S. Treasuries and back into equities.

Geopolitics again overshadowed economic data. Home prices increased by just 0.1% in June according to the monthly Case Shiller survey, but consumer confidence improved dramatically in August with the Conference Board index reaching its second highest reading since 2000.

Developments on the Korean peninsula left red across Europe with EU-zone bourses sharply lower at the close. Although losses were mitigated by gains for miners, most markets closed near 1% lower, including Germany’s DAX which closed 1.46% lower.

Crude oil was down $0.64 to $45.93 per barrel. Natural gas was down $0.004 to $2.95 per 1 million BTU. Gold was up $4.70 to $1,320.00 an ounce, while silver was up $0.081 to $17.61 an ounce. Copper was up $0.016 to $3.10 per pound.

Among energy ETFs, the United States Oil Fund was down 1.47% to $9.39 with the United States Natural Gas Fund was down 0.08% to $6.56. Amongst precious-metal funds, the Market Vectors Gold Miners ETF was up 0.86% to 24.37 while SPDR Gold Shares were up 0.22% to $124.96. The iShares Silver Trust was up 0.35% to $16.56.

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