Military tension has intensified between North Korea and South Korea

Market Update

4:30 pm : Participants kept stiff and steady pressure on stocks all session. Their efforts came amid news that military tension has intensified between North Korea and South Korea, and ongoing contagion concerns for Europe.

Each of the major equity averages tumbled more than 1% today. Downside momentum took the Dow below the 11,000 before it settled on its 50-day moving average and the S&P 500 moved below 1180 before it recovered to that point. Sell-offs of a similar degree were made abroad. Collective weakness left the Dow Jones World Index to drop 1.9% in its worst single-session slide since August.

The push to dump stocks came in response to news that artillery fire was exchanged overnight between North Korea and South Korea. Though tension between the two nations has been persistent, the latest episode marks a dramatic escalation of the tone between them.

That development added to the distress of market participants, who have long held concern for the fragile state of finances among countries in the European Union periphery. Even Ireland remains a point of worry as it has yet to completely structure a bailout package and implement austerity measures.

Distress and uncertainty moved many into the relative safety of the dollar, which was up 1.3% against competing currencies at the close of trade. The advance marked its biggest one-day bounce in a month and put the currency at its best level in almost two months.

Only a few pockets of strength were seen this session. Hewlett-Packard (HPQ 44.19, +0.94) was the only blue chip in the Dow to post a gain. Its strength was owed to better-than-expected earnings and upside guidance.

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