U.S. Stocks Fall on North Korea Missiles, Oil, Economic Reports
July 5 (Bloomberg) -- The Nasdaq Composite Index had its biggest decline in three weeks as U.S. stocks were buffeted by North Korea's launch of test missiles, record oil prices and economic reports that pointed to higher interest rates.
``The combination of geopolitical risk, rising rates and, I'd add thirdly, concern over second-quarter earnings is causing investors to pull back,'' said Russ Koesterich, a money manager at Barclays Global Investors in San Francisco.
Factory orders rose more than economists forecast and U.S. companies added the most jobs since at least 2001, heightening concern that the Federal Reserve will keep raising rates after 17 consecutive increases. Companies will start reporting quarterly earnings next week.
Technology stocks led the slide after two computer-chip makers, Marvell Technology Group Ltd. and Maxim Integrated Products Inc., disclosed government investigations into their stock-option grants.
The Nasdaq dropped 37.09, or 1.7 percent, to 2153.34, the biggest decline since June 12. The Standard & Poor's 500 Index lost 9.28, or 0.7 percent, to 1270.91. The Dow Jones Industrial Average slid 76.20, or 0.7 percent, to 11,151.82.
Worldwide Declines
The U.S. joined a worldwide equity decline with the Morgan Stanley Capital International World Index falling 1.3 percent, the most since June 13. Gold rose to the highest in almost a month, reaching $629.70 an ounce in New York as investors sought a haven.
Alcoa Inc., the world's largest aluminum producer, is scheduled to be the first company in the Dow average to report second-quarter earnings on July 10.
During the past four weeks, analysts have reduced their earnings-growth forecasts for the period for all but two of 10 industry groups in the S&P 500. The exceptions are energy and materials companies.
North Korea fired at least seven missiles over the Sea of Japan, including a type that may be capable of reaching Alaska. White House National Security Adviser Stephen Hadley called the firings ``provocative.'' Japan may impose economic sanctions, a move that North Korea has said it would consider a declaration of war.
Oil Rises
Oil gained 1.7 percent, touching a record $75.40 a barrel in New York, on speculation a conflict in Asia could disrupt supplies.
Orders placed with factories rose 0.7 percent after a 1.8 percent decrease in April, the Commerce Department said. Economists in a Bloomberg News survey forecast a gain of 0.1 percent, the median estimate.
Automated Data Processing Inc., the world's biggest paycheck processor, said U.S. companies added 368,000 jobs in June, the most since 2001. The Labor Department is expected to say July 7 that employers added 160,000 jobs last month, according to economists surveyed by Bloomberg.
ADP says there is a 90 percent correlation between its data and the Labor Department's monthly figure. The former excludes federal hiring.
Treasuries fell after the economic reports. The 10-year note's yield rose more than 7 basis points to 5.22 percent, according to bond broker Cantor Fitzgerald LP. A week ago, it touched 5.25 percent, the highest since May 2002. Yields move inversely to prices.
Stock Options Investigations
Marvell slumped $3.53 to $41.31. The company, which makes chips for laptop computers, said the U.S. Justice Department and Securities and Exchange Commission are investigating its options grants.
Maxim slipped 98 cents to $31.27. The maker of chips used in consumer electronics is also the subject of Justice Department and SEC inquiries into options.
Duquesne Light Holdings Inc. jumped $2.95 to $19.39. A group led by Macquarie Bank Ltd., Australia's largest investment bank, agreed to buy the Pittsburgh-based electric utility for about $1.59 billion in cash, or $20 a share. That's 22 percent more than Duquesne's closing price on July 3.
Trump Entertainment Resorts Inc., which has all three of its casinos in Atlantic City, fell 78 cents to $19.50. Casinos in Atlantic City shut down for the first time in their 28-year history, casualties of a budget impasse in New Jersey's state capitol.
Boyd Gaming Corp., co-owner of The Borgata Hotel Casino & Spa with MGM Mirage, lost 54 cents to $39.35. MGM declined 58 cents to $40.25.
To contact the reporter on this story:
Nick Baker in New York at nbaker7@bloomberg.net.
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here's what the UN guy from PRC said.
"We hope that all sides will maintain calm and restraint."
