North Korea’s latest missile launch jolted the U.S. stock market Tuesday, but major indexes pulled back from those early losses and mostly finished higher as the weakening dollar gave technology and industrial companies a boost.
Investors bought bonds, which are traditionally considered safe assets, after North Korea fired a mid-range ballistic missile that crossed over northern Japan and fell into the Pacific Ocean. It’s believed to be the first time the country has sent a missile over Japan, and it seemed designed to show that North Korea can back up a threat to target the U.S. territory of Guam. Energy and insurance companies continued to feel the effects of Tropical Storm Harvey, which is dumping record amounts of rain on the Gulf Coast. The Dow Jones industrial average fell 134 points when the market opened.
“It was a double whammy for investors,” said Karyn Cavanaugh, senior market strategist at Voya Investment Strategies. But she said investors are unlikely to sell and remain on the sidelines because much of the global economy is growing in sync. That will help company results.
“Buying on the dips is going to continue as long as earnings continue to move forward, because investors know the market is going to continue to follow those earnings,” she said.
And investors’ fears eased as the day went on. As the dollar declined to two-and-a-half-year lows, companies that do a lot of business outside the U.S. climbed. A weaker dollar boosts their sales and helps their profits when they are converted back into dollars.
The Standard & Poor’s 500 index rose 2.06 points, or 0.1 percent, to 2,446.30. The Dow Jones industrial average gained 56.97 points, or 0.3 percent, 21,865.37. The Nasdaq composite added 18.87 points, or 0.3 percent, to 6,301.89. The Russell 2000 index of smaller-company stocks picked up 1.45 points, or 0.1 percent, to 1,383.68. Still, most of the stocks on the New York Stock Exchange fell.
The dollar has weakened in part because a lot of economies in other regions are getting stronger, which boosts their currencies. The dollar is down almost 10 percent in 2017, at its lowest point in more than a year and the euro is at two-year highs.
Defense contractors climbed. Raytheon advanced $3.87, or 2.2 percent, to $182.11. United Technologies and Rockwell Collins rose after the Wall Street Journal reported that the companies are close to a deal. United Technologies, which makes jet engines, elevators and other products, jumped $3.37, or 2.9 percent, to $118.70 and aviation electronics maker Rockwell Collins rose $2.75, or 2.1 percent, to $130.74.
The dollar rose to 109.71 yen from 109.09 while the euro rose to $1.1992 from $1.1979.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.12 percent from 2.16 percent. Lower bond yields translate to lower interest rates, and banks fell as investors expected them to make less money from lending.
The Gulf Coast region continued to absorb heavy rains and widespread flooding, with Tropical Storm Harvey expected to dump even more rain on the region over the next few days. Tens of thousands of people are seeking refuge in shelters.
On Wall Street, insurers continued to fall as investors wondered if they are facing big losses. MetLife fell 84 cents, or 1.8 percent, to $46.73.
Companies that drill for oil in the Gulf or onshore in Texas are falling as investors worry about potential lost production. Anadarko Petroleum gave up 56 cents, or 1.4 percent, to $40.71.
Benchmark U.S. crude gave up 13 cents to $46.44 a barrel in New York. Brent crude, the international standard, picked up 11 cents to $52 a barrel in London. The price of wholesale gasoline jumped another 6 cents, or 4.1 percent, to a two-year high of $1.78 a gallon.
Sporting goods companies tumbled again after Finish Line forecast weak second-quarter results and slashed its forecasts for the rest of the year. The retailer said discounts on shoes are growing, and its stock tumbled $1.92, or 18.4 percent, to $8.50. It was just the latest in a series of dire reports from the industry. Foot Locker, which like Finish Line has taken a 50-percent drop this year, fell 54 cents, or 1.5 percent, to $35.16. Nike gave up $1, or 1.9 percent, to $52.73.
Electronics retailer Best Buy had a solid second quarter and raised its forecasts for the year, but its stock sank after CEO Hubert Joly said he does not think the chain’s sales will stay as strong as they were in the most recent quarter. Its shares fell $7.44, or 11.9 percent, to $55.04.
Gold climbed $3.60 to $1,318.90 an ounce and remains at its highest price since late September. Silver lost 2 cents to $17.43 an ounce. Copper rose 2 cents to $3.08 a pound.
In other energy trading, heating oil rose 3 cents to $1.67 a gallon. Natural gas added 4 cents to $2.96 per 1,000 cubic feet.
Germany’s DAX slid 1.5 percent and the CAC 40 in France fell 0.9 percent. The FTSE 100 index in Britain lost 0.9 percent. Asian indexes had a smaller reaction. In Japan, the benchmark Nikkei 225 slid 0.5 percent and South Korea’s Kospi lost 0.2 percent. In Hong Kong, the Hang Seng shed 0.1 percent.