TSX hits 1-month low on risk aversion, lower oil prices

Stocks saw some strength during trading on Friday, regaining ground following the sell-off seen in the previous session. On Thursday, the S&P 500 started the day with weaker sentiment and closed the day below the support level of 2,450.

The Dow Jones Industrial Average fell 163 points, or 0.74%, to 21,886, the S&P 500 lost 31 points, or 1.23%, to 2,443 and the Nasdaq Composite dropped 117 points, or 1.84%, to 6,236. The fall of the S&P 500 has been higher, at 1.5 %, most felt still for the Nasdaq, technology stocks losing 2.1% on the session. Banks and department store stocks also were among the big decliners. Economists had expected prices to rise by 0.2 percent.

A currency trader gestures at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Friday, Aug. 11, 2017.

The smaller than expected increase in consumer prices has led to optimism that the Federal Reserve will not be in a hurry to raise interest rates.

"As a portfolio manager, you say, 'Do I think we'll get a war out of this?'" said Torsten Slok, chief worldwide economist at Deutsche Bank, referring to the back and forth between North Korea and President Donald Trump.

"I will tell you this, North Korea better get their act together or they're going to be in trouble like few nations ever have been in trouble in this world", Trump said.

ANALYST'S TAKE: "The tensions between North Korea and the U.S.is an excuse for profit-taking", Seo Sang Young, an analyst at Kiwoom Securities.

"Military solutions are now fully in place, locked and loaded, should North Korea act unwisely". Indeed, US equities sold off at the open and added to those losses this afternoon following President Trump's latest warning to North Korea.

In Europe, the Stoxx 600 Index fell 1%. The index bounced off its lowest closing level in six months. Biotech companies Celgene and Amgen lost 3.8 percent and 2.6 percent, respectively.

Significant strength was also visible among software stocks, as reflected by the 1.2 percent gain posted by the Dow Jones Software Index. Genesee & Wyoming (GWR) is posting a notable gain after reporting an increase in July traffic.

The rhetoric, which began late Tuesday and continued into Friday, interrupted stocks' march higher and cracked the calm that has enveloped the market for months. Earlier in Asia, Japan's benchmark Nikkei 225 slipped less than 0.1 percent, while Hong Kong's Hang Seng slid 1.1 percent.

The major European also saw further downside on the day.

The technology sector was the S&P's biggest drag with a 2.2 percent drop.

Investors opted for the perceived safety of US Treasuries, which pushed the yield on the 10-year note three basis points lower to 2.21%.

The headlines about North Korea served as a spark to jolt investors out of complacency on the heels of an extended period of calm in the market, said McClellan who shared the following chart in a report.

Retailers Wal-Mart (WMT), Home Depot (HD), Target (TGT), Staples (SPLS), and Gap (GPS) are also among the companies due to report their quarterly results next week.

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