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 midrange 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 of 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.
Investors’ fears eased as the day went on. As the dollar declined to 2½-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 those funds are converted back into dollars.
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% in 2017, at its lowest point in more than a year. The euro is at two-year highs.
Defense contractors climbed. Raytheon advanced 2.2% 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, climbed 2.9% to $118.70. Aviation electronics maker Rockwell Collins rose 2.2% to $130.74.
Bond prices rose. The yield on the 10-year Treasury note fell to 2.12% from 2.16%. Lower bond yields translate to lower interest rates, and banks fell as investors expected them to make less money from lending.
Companies that drill for oil in the Gulf or onshore in Texas declined as investors worried about potential lost production because of the storm. Anadarko Petroleum fell 1.4%, to $40.71.
Benchmark U.S. crude fell 13 cents to $46.44 a barrel in New York. Brent crude, the international standard, rose 11 cents to $52 a barrel in London. The price of wholesale gasoline jumped 6 cents, or 4.1%, 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 dived 18.4% to $8.50. Foot Locker, which like Finish Line has taken a 50% drop this year, fell 1.5% to $35.16. Nike fell 1.9% to $52.73.
Electronics retailer Best Buy had a solid second quarter and raised its forecasts for the year, but its stock sank after Chief Executive 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 sank 11.9% to $55.02.
Gold climbed $3.60 to $1,318.90 an ounce, its highest price since late September. Silver fell 2 cents to $17.43 an ounce. Copper rose 2 cents to $3.08 a pound.
Heating oil rose 3 cents to $1.67 a gallon. Natural gas rose 4 cents to $2.96 per 1,000 cubic feet.
The dollar rose to 109.71 yen from 109.09 yen. The euro rose to $1.1992 from $1.1979.
Germany’s DAX slid 1.5%. The CAC 40 in France and the FTSE 100 index in Britain both lost 0.9%. Asian indexes had a smaller reaction. In Japan, the benchmark Nikkei 225 slid 0.5%. South Korea’s Kospi lost 0.2%. In Hong Kong, the Hang Seng shed 0.1%.
3:15 p.m.: This article was updated with closing prices, context and analyst comment.
11:30 a.m.: This article was updated with market prices and context.
This article was originally published at 7 a.m.