NEW YORK (AFP) - Wall Street stocks stumbled on Tuesday (Sept 5), with financial shares falling hard, as renewed worries about North Korea pushed investors away from equities and towards bonds and other safe investments.
UN Secretary-General Antonio Guterres warned against using "confrontational rhetoric" over North Korea and said big powers must come up with a single strategy to address the crisis as major countries sparred over a response to Pyongyang's provocations.
The latest back-and-forth sharpened the sense North Korea was becoming "a permanent part of the investor psychology right now and that causes a flight to safety," said Art Hogan, chief market strategist at Wunderlich Securities.
An increasingly jammed calendar in Washington weighed on sentiment, dimming the odds to "pivot quickly to tax reform," he said.
President Donald Trump's decision Tuesday to end an amnesty programme for 800,000 people brought to the United States illegally as young children adds another thorny debate to the mix, Hogan said.
The Dow Jones Industrial Average fell 1.1 per cent to close the first session after the holiday weekend at 21,753.31.
The broad-based S&P 500 shed 0.8 per cent to end at 2,457.85, while the tech-rich Nasdaq Composite Index dropped 0.9 per cent to 6,375.57.
Large banks were hammered as investors fled into US Treasury bonds, a low-risk asset, which was expected to crimp net interest margins, a key source of profits. Bank of America lost 3.3 per cent, Goldman Sachs 3.6 per cent and JPMorgan Chase 2.4 per cent.
But home-improvement retailers Lowe's and Home Depot both climbed more than 1 per cent as another major hurricane, Irma, approached the United States. The chains typically see a jump in sales as a result of storms.
Airplane parts supplier Rockwell Collins rose 0.3 per cent following the announcement it agreed to be bought by conglomerate United Technologies for US$30 billion (S$40 billion).
But Dow member United Technologies fell 5.7 per cent, with declines accelerating after Boeing, a customer of both companies, suggested it could try to prod regulators to block the deal. Boeing fell 1.4 per cent.
Toy companies Hasbro and Mattel lost 2.9 per cent and 1.6 per cent, respectively, after Danish toy giant Lego announced it would slash 8 per cent of its global workforce after a drop in sales in the US and Europe.