UN Secretary General Antonio Guterres warned against using "confrontational rhetoric" over North Korea and said big powers must come up with a single strategy to address the crisis as major countries sparred over a response to Pyongyang's provocations.
The latest back-and-forth sharpened the sense North Korea was becoming "a permanent part of the investor psychology right now and that causes a flight to safety," said Art Hogan, chief market strategist at Wunderlich Securities.
An increasingly jammed calendar in Washington weighed on sentiment, dimming the odds to "pivot quickly to tax reform," he said.
President Donald Trump's decision Tuesday to end an amnesty program for 800,000 people brought to the United States illegally as young children adds another thorny debate to the mix, Hogan said.
The Dow Jones Industrial Average fell 1.1 percent to close the first session after the holiday weekend at 21,753.31.
The broad-based S&P 500 shed 0.8 percent to end at 2,457.85, while the tech-rich Nasdaq Composite Index dropped 0.9 percent to 6,375.57.
Large banks were hammered as investors fled into US Treasury bonds, a low-risk asset, which was expected to crimp net interest margins, a key source of profits. Bank of America lost 3.3 percent, Goldman Sachs 3.6 percent and JPMorgan Chase 2.4 percent.
But home-improvement retailers Lowe's and Home Depot both climbed more than one percent as another major hurricane, Irma, approached the United States. The chains typically see a jump in sales as a result of storms.
Airplane parts supplier Rockwell Collins rose 0.3 percent following the announcement it agreed to be bought by conglomerate United Technologies for $30 billion.
But Dow member United Technologies fell 5.7 percent, with declines accelerating after Boeing, a customer of both companies, suggested it could try to prod regulators to block the deal. Boeing fell 1.4 percent.
Toy companies Hasbro and Mattel lost 2.9 percent and 1.6 percent, respectively, after Danish toy giant Lego announced it would slash 8 percent of its global workforce after a drop in sales in the US and Europe.
source: news.abs-cbn.com
