U.S. equities suffered their steepest pullback in months on Thursday, pushing the Dow Jones Industrial Average back below the 22,000 level in dramatic fashion, as the war-of-words between President Donald Trump and North Korea continued to escalate.
The result was the first three-day loss in stocks since March amid a big breakout by the CBOE Volatility Index (INDEXCBOE: VIX ), which pushed to its highest level since April. That boosted the Short-Term VIX (NYSEARCA: VXX ) recommended to Edge subscribers to a gain of nearly 14%.
In the end, the Dow lost 0.9%, the S&P 500 lost 1.5%, the Nasdaq Composite gave back 2.1% and the Russell 2000 finished 1.8% lower. Elsewhere, Treasury bonds strengthened, the dollar weakened, gold gained 0.8% on a safe-haven bid and oil gave back 1.9% amid a focus on higher OPEC production as the supply cap agreement starts breaking down.
Click to Enlarge Breadth was heavily negative with decliners outpacing advancers 6.6-to-1 with NYSE volume at 106% of the 30-day average.
Utilities led the way on the yield compression, rising 0.3%. Technology and financials - areas of recent momentum upside - were the laggards down 2.2% and 1.8%, respectively.
Retail earnings were in focus. And they weren't good. Macy's Inc (NYSE: M ) fell 10.3% after reporting better-than-expected revenues and earnings as investors focused on an increase in cost of goods amid a rise in promotional activity.
Kohl's Corporation (NYSE: KSS ) fell 5.8%, for the same reason. Blue Apron Holdings Inc (NYSE: APRN ) collapsed 17.6% after reporting a Q2 revenue beat , but weak earnings and a 9% quarterly drop in customers after pulling back on marketing spend.
Snap Inc (NYSE: SNAP ) dropped 12% after hours after reporting a loss of 16 cents per share - two cents worse than expected - on a big increase in its cash burn rate. J C Penney Company Inc (NYSE: JCP ) will report before the open on Friday.
Click to Enlarge The superlatives are easy to find. Stocks worst day in three months. VIX biggest spike since August 2015 China devaluation. High-yield bonds worst day in five months. Finally, it looks like the stock market's disconnect with reality is about to close.
In a note to clients earlier today, Goldman Sachs technical analysts warned that market signals suggest a "period of corrective price action has begun" setting the stage for further price pressure.
Market breadth continues to deteriorate rapidly as the percentage of S&P 500 stocks in uptrends is at risk of falling below its May low. A breakdown below that level would put the entire post-election rally in jeopardy - at least from the standpoint of upside participation.
Today's Trading Landscape
To see a list of the companies reporting earnings today, click here .
For a list of this week's economic reports due out, click here .
More From InvestorPlace
- 3 Dividend Growth ETFs You Probably Didn't Know Existed
- Facebook Watch Intensifies the Bull Case for FB Stock
- 7 Stocks to Fight the Fake News
The post North Korea Tensions Push Stocks to Worst Day in Months appeared first on InvestorPlace .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.