BloombergNEW YORK (Bloomberg) — A flareup of tension on the Korean Peninsula damped demand for risk assets ahead of the weekend, offsetting fresh signs of strength in the world’s largest economy.
The S&P 500 Index halted an eight-day rally, paring a weekly gain to 1.2 percent.
The yen rose versus the dollar on speculation North Korea may test a missile at the same time the U.S. president ratcheted up rhetoric against the rogue nation.
Gold turned higher.
The saber rattling threatened to overshadow the latest U.S. jobs report, which brought the first decline in hiring since 2010 because of the hurricanes, but also a spike in hourly wages that bolstered the odds for tighter monetary policy.
Earlier, data showing a spike in U.S. wages added optimism in the economy and sent the dollar to a two-month high.
The 10-year Treasury yield spiked to near 2.40 percent before falling back four basis points. West Texas crude sank about 3 percent.
“People are taking their money off the table. It’s common to see traders flatten out their positions,” said Tom Mangan, senior vice president of James Investment Research in Xenia, Ohio, which oversees about $6 billion.
“The economy is doing fine, and the only real concern that we see are exogenous things like North Korea, or a major mistake in trade policy.”
Signs that the global economy continues to strengthen had underpinned demand for stocks and the dollar, and weighed on Treasuries.
The rise in hourly wages added to speculation that inflation may be picking up and led the market to further price in a hike by the Federal Reserve in December.