The US stock market on Thursday suffered its steepest decline in three months and Wall Street’s “fear gauge” jumped to its highest level since the US election, after President Donald Trump warned that North Korea should be “very, very nervous”.
Financial markets have been deep in the summer doldrums, pushing volatility measures down to fresh multiyear lows, but the escalating sabre-rattling between North Korea and the US has triggered jitters.
The S&P 500 index slid 1.5 per cent — its biggest one-day drop since the last flash of turbulence on May 17 — with the weakness exacerbated by a bellicose press conference by Mr Trump. Earlier this week the president threatened North Korea with “fire and fury” and on Thursday at his Bedminster, New Jersey golf club he said that his warning had not been tough enough.