Tallahassee Journal

Stocks drop on new shock: N. Korea claims H-bomb test

Stocks drop on new shock: N. Korea claims H-bomb test

Wall Street stocks are having another turbulent session as investors got blindsided by yet another early-year shock: claims from North Korea that it successfully tested a powerful hydrogen bomb. The news out of North Korea rattled investors around the globe. The latest geopolitical flare-up in an increasingly volatile world prompted investors to sell stocks and reduce risk The nuclear saber-rattling comes just days after the first shock of the year: a major plunge in shares of mainland China stocks and renewed global growth fears sparked by weak manufacturing readings in China and the U.S. A weaker-than-expected reading today on China’s services economy — which hit a 17-month low — added to worries about the global economy.AP FINANCIAL MARKETS WALL STREET F USA NY

“We are just three days into the year and already global event risk is dominating the financial market landscape everywhere,” David Rosenberg, chief economist and stratetist at Gluskin Sheff said in a research note. The Dow Jones industrial average was down about 215 points, or 1.3%, as the blue-chip index fell back below the 17,000 mark.  The broader Standard & Poor’s 500 was down 1.1% as it dipped back below 2000. The Nasdaq composite was off 0.9%. “There’s an overall risk-off mood” in the markets as a result of North Korea’s H-bomb, Sreekala Kochugovindan, an analyst at Barclays told clients in a report this morning.

This is the latest setback for the stock market early in 2016, which kicked off Monday with the Dow’s worst opening-day decline since 2008 and the worst for the S&P 500 in 15 years. Adding to the market’s woes Wednesday is another sharp drop in the price of a barrel of U.S.-produced crude, which tumbled 3.5% to $34.73 a barrel amid the growing worries related to slowing growth. Oil is now trading at it lowest level since 2004, according to Reuters. Wall Street is also waiting for the release of the minutes of the Federal Reserve’s December meeting later today. At last month’s meeting the Fed hiked short-term interest rates for the first time since 2006. Investors will be seeking clues from the minutes as to how “gradual” coming rate hikes from the Fed will be.

Wall Street is expecting two to three quarter-point moves. But in an interview with CNBC earlier today, Fed vice chair Stanley Fischer said that estimates of four Fed rate increases are “in the ballpark,” adding that the forecast for just two hikes is “too low. There was, however, one upbeat data nugget for Wall Street today: payroll processor ADP reported that private employers created 257,000 new jobs in December, its best reading since July 2014.