While you were sleeping: Tech stocks slide as Nth Korea tensions rise

Slides in technology stocks, including those of Apple and Facebook, led Wall Street lower as concern about intensifying tension between North Korea and the US weighed on sentiment.

Apple shares traded 1.1% weaker amid reports that demand for its iPhone 8 appears tepid.

"Orders of the new iPhone have disappointed the market," Alan Tseng, Taipei-based vice president at Capital Investment Management, told Bloomberg.

At the close of trading in New York, the Dow Jones Industrial Average was down 53.50 points, or 0.2%, to 22,296.02. Earlier in the session it dropped 130 points after North Korea’s foreign minister said President Donald Trump’s recent comments constituted a declaration of war. 

The Nasdaq Composite Index fell 0.9% to 6370.59 and the Standard & Poor's 500 Index slid 0.2% to 2496.66.

"What you are seeing is those tech names pulling back," Quincy Krosby, chief market strategist at Prudential Financial, told Bloomberg. "The fact is that right now, you have a fully valued market and little catalysts at this point to push the market higher. "

Visa and Microsoft, down 2.2% and 1.7% respectively, led the drop in the Dow. Exxon Mobil and General Electric, up 1.3% and 1.1% respectively, went against the trend.

The VIX, or the Chicago Board Options Exchange Volatility Index which measures expectations of future volatility in stocks, climbed 11.8 percent to 10.72.

Meanwhile, US Treasuries gained, sending the yield on the 10-year note three basis points lower to 2.218%, according to Bloomberg.

Fed's hawkish tone
Investors are awaiting a speech by Federal Reserve Chair Janet Yellen, set to speak on Tuesday, following the Federal Open Market Committee's hawkish tone at the end of last week's meeting.

On Monday, New York Fed President William Dudley said he expected inflation would accelerate with "the fading of effects from a number of temporary, idiosyncratic factors," firming up bets the central bank would increase its target interest rate in December.

"I expect inflation will rise and stabilise around the FOMC's 2% objective over the medium term," he said in a speech in Syracuse, New York. "In response, the Federal Reserve will likely continue to remove monetary policy accommodation gradually."

In Europe, the Stoxx 600 Index rose 0.2%. Germany's DAX Index eked out a 0.02% gain, as advances in Merck and Bayer offset a drop by RWE and Commerzbank.

The euro weakened after elections in Germany showed worse-than-expected support for Chancellor Angela Merkel's conservatives.

"Investors were expecting a victory for Angela Merkel, but there has been a surprise in the relatively poor performance of the CDU and SPD, who suffered their worst results since 1949," Nick Peters, multi asset portfolio manager at Fidelity International, wrote in a note, Bloomberg reported.

The UK's FTSE 100 Index fell 0.1%, while France's CAC 40 Index declined 0.3%.

(BusinessDesk)