NEW YORK – Concerns over North Korea's nuclear ambitions and record oil prices sent stocks lower Wednesday and added to Wall Street's worries about the economy and interest rates.
The Dow Jones industrial average fell 76.20, or 0.68 percent, to 11,151.82, after gaining 77.80 in holiday-shortened trading Monday.
Broader stock indicators also fell sharply. The Standard & Poor's 500 index lost 9.28, or 0.72 percent, to 1,270.91, and the Nasdaq composite index fell 37.09, or 1.69 percent, to 2,153.34.
After North Korea test fired a seventh missile Wednesday, stocks around the globe sagged as investors worried that tensions between North Korea and the United States could intensify.
Nervousness about North Korea's actions, along with concerns about gasoline supplies, pushed crude oil futures to a new intraday record of $75.40 per barrel before they retreated slightly. A barrel of light crude nonetheless set a settlement record of $75.19, up $1.26, on the New York Mercantile Exchange.
With the U.S. economy still strong — a report on factory orders out Wednesday was stronger than expected — investors worrying about interest rates remained hesitant to buy stocks. The Labor Department's report on June employment due Friday added to the market's hesitancy, since a strong report could encourage the Fed to continue raising interest rates.
"Investors aren't really looking for opportunities to get in. They're looking for reasons to get out," said Scott Wren, equity strategist for A.G. Edwards & Sons. "I read the Fed statement last week as dovish, but with that employment report coming up, nobody wants to get into the market in front of that."
Bonds fell sharply, exacerbating the drop in stocks. The yield on the 10-year Treasury note shot up to 5.22 percent from 5.15 percent late Monday. The dollar made gains against most major currencies, while gold prices moved higher as well.
Overseas, Japan's Nikkei stock average dropped 0.73 percent on news of the Korean missile launch. In Europe, Britain's FTSE 100 closed down 0.97 percent, France's CAC-40 slid 1.26 percent for the session, and Germany's DAX index tumbled 1.8 percent.
A Commerce Department report on factory orders did little to assuage Wall Street. Orders rose by a solid 0.7 percent in May, recovering from a 1.8 percent drop the prior month. Economists had expected orders to rise just 0.1 percent. The report could signal an economy robust enough to withstand further interest rate hikes — something Wall Street had hoped to avoid.
Investors feared a private-sector payroll survey could foreshadow a strong jobs report Friday. A survey by Automated Data Processing and Macroeconomic Advisers showed private employment growing 368,000 in June — a very strong increase that could spark price hikes if consumer demand grows along with employment. Economists expect the Labor Department report to show just 160,000 new jobs.
"Figures like these cast doubt on the Fed's conclusion that economic growth is moderating," said Stuart Schweitzer, global markets strategist at JP Morgan Asset and Wealth Management. "What you're seeing here today is a market that believes that the Fed is still at risk here."
In corporate news, General Motors Corp. (GM) added a penny to $29.42 after Chief Executive Rick Wagoner agreed to meet with Carlos Ghosn, the CEO of Nissan and Renault, later this month to discuss a possible three-way alliance, according to media reports.
Rambus Inc. (RMBS) gained $1.53, or 6.7 percent, to $24.30 on its announcement of a patent licensing agreement with Toshiba for memory controllers.
Fellow semiconductor maker Marvell Technology Group Ltd. (MRVL) said it had received a request from the Securities and Exchange Commission and federal prosecutors over its executive stock compensation plans. Marvell skidded $3.53, or 7.9 percent, to $41.31.
Declining issues outnumbered advancers by nearly 3 to 1 on the New York Stock Exchange, where preliminary consolidated volume came to 2.24 billion shares, compared with 1.14 billion traded on Monday.
The Russell 2000 index of smaller companies fell 1.95, or 1.5 percent, to 719.85.