S&P falls 1.4 percent in safety flight on North Korea tensions

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

With Japan and South Korea also warning North Korea, investors are taking a step back to see what is happening before chipping in back, Bakhos said. "But we're in a low inflationary environment, which can help valuations remain elevated for longer than they would otherwise". The normally quiet month of August is low on volume but ramped up by volatility as investors also absorb deflating economic data and a few disappointing earnings reports. Is that a reason to be?

USA stock futures pointed south on Friday as geopolitical tensions continued to ramp up between North Korea and the United States, sending investors into less risky assets.

Still, the S&P and the Dow were on track to post their biggest weekly loss in about five months and the Nasdaq on course to post its biggest weekly fall in about six weeks. That conflict will continue to weigh on stocks, analysts believe.

Investors said the week's swings were as much a result of earnings as geopolitics.

The Dow Jones Industrial Average, which had been steadily hitting records, posted its biggest decline since May on Thursday, while the CBOE Volatility Index, known as Wall Street's "fear gauge", rose to its highest level of the year. Nine of the index's 10 main groups ended lower.

Federal Reserve Presidents Robert Kaplan and Neel Kashkari are scheduled to give speeches.

Outside the political arena, declines in a pair of technology stocks added to the cautious tone on the day.

Macy's dropped 4.2 percent as it reported second-quarter revenues fell 5.4 percent to $5.6 billion, another sign of the travails facing department stores. The stock has more than doubled over the past 12 months, gaining more than 160%. Markets in greater China mirrored the slide in global equities.

The Stoxx Europe 600 benchmark was down 1% (http://www.marketwatch.com/story/european-stocks-face-worst-week-in-9-months-on-us-north-korea-tensions-2017-08-11), while Hong Kong's Hang Seng led the Asian losses with a drop of 2%. Titled "Reckless game over the Korean Peninsula runs risk of real war", the editorial suggested China will stay neutral if North Korea strikes first, but will intervene if the U.S.is the first mover.

If the North Korean regime "does anything" to the USA or a USA ally "things will happen to them like they never thought possible", he told reporters on Thursday, according to Bloomberg.

Safe-haven assets such as gold and the Swiss franc were again in favor.

Vanessa Coleman

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