US stocks indexes were higher in afternoon trading on Friday, on track to snap a three-day losing streak, as tepid inflation data brought back investors to riskier assets, despite heightened tensions between the United States and North Korea.
Stocks around the world fell sharply on Thursday and investors moved into the yen, gold and other safe-haven assets amid more aggressive talk between the United States and North Korea.
"The market is trying to interpret the CPI data as somewhat positive because it is anticipating that the Fed will be on hold not only in September but also possibly in December", said Robert Pavlik, chief market strategist at Boston Private Wealth. Major U.S. indices had posted record highs in recent weeks.
The verbal escalation has been further fuelled on Friday by president Donald Trump, who has warned that if the north Korean leader attacked Guam, Pacific island and american territory, he " would regret ".
The tensions, since Trump's "fire and fury" comments on Tuesday, have wiped out almost $1 trillion from the global equity markets.
USA stocks deepened their losses following the latest Trump comments, and the S&P 500 volatility index, known unofficially as the "fear index", rose decisively.
"There's not a great incentive to buy big", said Lerner of SunTrust Advisory.
The damage inflicted on world stocks this week by the escalating war of words over North Korea topped $1 trillion yesterday, as investors again took cover in the yen, the Swiss franc, gold and government bonds.
The Nasdaq Composite was up 19.35 points, or 0.31%, at 6 236.22. The S&P 500 is up 9 percent, while the Dow is up 10.6 percent. On the Nasdaq, 1 378 issues rose and 892 fell.
"Pretty remarkable, perhaps even extraordinary, considering", said Tim Ash, strategist at fund manager BlueBay.
On Thursday, the CBOE Volatility Index, a barometer of expected near-term stock market volatility, closed at its highest since the U.S. presidential election. The precious metal climbed 1.3 percent in the previous session, its biggest gain since mid-May, and touched $1,278.66 an ounce, it highest level since June 14. On the Nasdaq, 1,462 issues rose and 1,227 fell.
"If the data continues to come in on the softer side, the market might start to price the Fed staying on hold this year", said Sireen Harajli, FX strategist at Mizuho in NY. The Russell 2000 index of smaller-company stocks picked up 1.69 points, or 0.1 percent, to 1,374.23.
Sterling was last trading at $1.3007, up 0.25 percent on the day.
The market was also waiting for data that would offer clues about the extent to which the strengthening US labour market is spilling over into inflation.
"There are four more (inflation) prints between now and the December FOMC meeting and we expect the Fed to remain data-dependent, if a touch more cautious", TD Securities said in a research note.
US gold futures for December delivery climbed 1 percent to $1,291.80 per ounce. Its weekly gain of 2.6 percent is the largest since June 2016.
Other markets: Oil turned lower after the International Energy Agency said oil supply rose for a third month as compliance with an OPEC output deal faltered but prices have rebounded (http://www.marketwatch.com/story/oil-prices-head-lower-as-global-tensions-continue-unabated-2017-08-11) to edge up.