By Barbara Kollmeyer and Anora M. Gaudiano, MarketWatch

Energy shares sell off as oil prices drop

U.S. stocks came off their worst levels of the session in Thursday afternoon trade as gains in industrials and consumer-discretionary shares helped trim an earlier slump, which came after President Donald Trump called off a June summit with North Korean leader Kim Jong Un, citing "open hostility" from the isolated nation.

What did markets do?

The Dow Jones Industrial Average , was last trading 72 points, or 0.3%, lower at 24,814, but had been down by as many as 280.91 points, or 1.1%. Shares of Exxon Mobil Corp.(XOM) and Chevron Corp. (CVX), both down by about 2%, weighed on the blue-chip gauge.

The S&P 500 fell 5 points, or 0.2% to 2,728, with seven of the 11 main sectors trading lower. Energy shares led losses, down 1.5%, with financials not far behind, down 0.8%. The technology-centric Nasdaq Composite Index was trading flat at 7,426, bouncing in and out of positive territory.

What's driving the markets?

Geopolitical worries hovered over markets after Trump called off (http://www.marketwatch.com/story/trump-calls-off-summit-with-north-koreas-kim-2018-05-24) the meeting that was set to take place June 12 in Singapore.

The cancellation followed a statement from Choe Son Hui, North Korea's vice minister of foreign affairs, in which he said if the talks didn't go ahead, the U.S. could instead face off with North Korea in a "nuclear-to-nuclear showdown."

Earlier, futures were trading higher, boosted by the minutes from this month's Federal Reserve meeting, released Wednesday afternoon. They got credit for lifting stocks late during that session, as the central bank indicated it won't be too aggressive in increasing interest rates (http://www.marketwatch.com/story/fed-signals-accommodative-approach-to-us-interest-rates-nearing-an-end-2018-05-23).

Read:Here's how stock-market investors could be surprised by a peak in rates (http://www.marketwatch.com/story/heres-how-stock-market-investors-could-be-surprised-by-a-peak-in-rates-2018-05-23)

The probability of three more rate increases by the end of this year, rather than two, decreased immediately after the release of the minutes.

What are strategists saying?

"The selloff after the cancellation of the North Korea meeting was muted, largely because it doesn't change the second-quarter earnings or economic growth," Karyn Cavanaugh, senior market strategist at Voya Financial.

"Geopolitical risks are never fun and markets tend to price in the bad news right away and the good news only gradually," Cavanaugh said.

"Global financial markets have been in a fragile state following corrections driven by policy fears, growth concerns, and of late, currency turmoil," said Steven Wieting, Citi Private Bank's global chief investment strategist, in a note.

"Over the coming year, however, we continue to see a more benign base case for the world economy than is currently priced. Thus, we continue to maintain moderate overweights in global equities," he said.

What's on the economic docket?

Initial jobless claims (http://www.marketwatch.com/story/jobless-claims-rise-to-7-week-high-of-23400-2018-05-24)rose by 11,000 to 234,000 in the week ended May 19, the highest level in seven weeks, but the increase is probably tied to seasonal swings in education-related employment. The layoffs number was higher than expected.

Elsewhere, existing-home sales (http://www.marketwatch.com/story/existing-home-sales-tumble-as-supply-crunch-squeezes-hard-2018-05-24)ran at a seasonally adjusted annual 5.46 million pace in April, below expectations.

Ahead of those reports, New York Fed President William Dudley was speaking early Thursday in London. He called for a continued shift (https://www.reuters.com/article/us-usa-fed-dudley/feds-dudley-urges-quick-shift-from-scandal-hit-libor-rate-idUSKCN1IP150) away from a scandal-plagued rate benchmark--the London interbank offered rate, or Libor.

(https://twitter.com/bankofengland/status/999554102534303744)

Philadelphia Fed President Patrick Harker said during a CNBC interview Thursday (https://www.cnbc.com/video/2018/05/24/philadelphia-fed-president-reacts-to-fed-minutes.html?play=1) that he expects three rate hikes in 2018, and three rate hikes in 2019. Harker said that he would be open to a fourth increase this year if inflation starts to run hotter. Harker also said policy makers are approaching the so-called neutral rate, which neither lifts nor reduces economic growth.

The Fed member was slated to take part in a panel discussion at a Dallas Fed conference on technology-enabled disruption at 2 p.m. Eastern.

Which stocks are in focus?

Shares in Victoria's Secret parent L Brands Inc.(LB)slumped 3.4% after the company lowered its outlook (http://www.marketwatch.com/story/victorias-secret-parent-l-brands-shares-down-on-outlook-cut-2018-05-23) late Wednesday.

Hormel Foods Corp.(HRL) shares fell by 2.2% after the food company, whose brands include Skippy, Spam and Natural Choice, reported fiscal second-quarter results that were a touch shy of forecasts.

Best Buy Co Inc.(BBY) reported earnings that came in above expectations, but shares sold off nevertheless, trading 7.3% lower.

Medtronic PLC(MDT)reported earnings and revenues that were above expectations, sending shares 2% higher.

McKesson Corp.(MCK) reported first-quarter revenue above, but profit short of, Wall Street's estimates. Shares were trading 2.5% lower.

Don't miss: GE's stock plunges toward worst day in 9 years after CEO John Flannery starts talking (http://www.marketwatch.com/story/ges-stock-plunges-after-ceo-john-flannery-starts-talking-2018-05-23)

What are other markets doing?

Japan's Nikkei 225 Index and South Korea's Kospi closed lower as auto makers tumbled (http://www.marketwatch.com/story/nikkei-kospi-slide-as-automaker-stocks-tumble-on-new-trump-tariff-threat-2018-05-23) on potential new U.S. tariffs on cars (http://www.marketwatch.com/story/trump-administration-mulls-tariffs-of-up-to-25-on-imported-autos-2018-05-23). European stockstraded mixed.

The ICE U.S. Dollar Index edged lower, after tapping its best level so far this year (http://www.marketwatch.com/story/dollar-mostly-gains-but-falls-vs-yen-on-haven-demand-2018-05-23) on Wednesday. The 10-year Treasury note yield retreated 3 basis points to 2.97%.

Gold futures closed above $1,300 for the first time in over a week, supported by geopolitical worries (http://www.marketwatch.com/story/gold-aims-to-extend-post-fed-minutes-pop-as-stocks-set-to-stumble-at-open-2018-05-24), while oil futures retreated sharply (http://www.marketwatch.com/story/oil-threatens-3rd-straight-drop-as-buildup-in-us-supplies-drags-market-lower-2018-05-24) 1.6% to $70.68 a barrel.

--Victor Reklaitis contributed to this article

(END) Dow Jones Newswires

May 24, 2018 14:24 ET (18:24 GMT)