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Stocks took an immediate dive on Thursday morning after President Donald Trump suddenly canceled his upcoming summit with North Korean leader Kim Jong Un.
Barely one hour into the trading day, the Dow Jones plunged by more than 200 points, with the S&P down three-quarters of a percent and Nasdaq falling just over half a percentage point.
In a letter to the North Korean leader and released by the White House, Trump told Kim Jong Un the widely anticipated meeting, scheduled for June 12 in Singapore, "will not take place," citing the recent "tremendous anger and open hostility" shown by North Korean officials.
Trump was referring to combative comments that surfaced on Wednesday, when a top foreign ministry official from North Korea called Vice President Mike Pence "a political dummy" and indicated that a nuclear showdown is not completely off the table.
The fractious relationship between Trump and the Hermit Kingdom has been the source of much market friction in recent days, with investors seeking safe assets such as gold to avoid the volatility pervading the stock exchanges. Gold was up by at least one percent Thursday morning.
"I think Trump got embarrassed and I think he's trying to dial back expectations," Jack Ablin, chief investment officer at Cresset Wealth Advisors, told CNBC. "I don't think investors would be blamed for thinking that this could go forward. It's all tied to a bunch of different things, including Chinese trade negotiations."
Markets were already on edge as a result of the back and forth over China tariffs, with the Commerce Department announcing Wednesday that new tariffs could be introduced for imported cars and auto parts, despite comments from Treasury Secretary Steven Mnuchin that the trade war was "on hold."
Trump ended his letter to the North Korean leader with the recommendation that if Kim still wanted to meet, "please do not hesitate to call me or write."