US stocks fell on Wednesday as North Korea's test-firing of a barrage of missiles rattled investors and strong payroll data tempered hopes for a pause in interest rate hikes.
The Nasdaq dropped nearly 2 percent, pressured by selling in such technology bellwether shares as Microsoft Corp and Apple Computer Inc defying international warnings, North Korea launched at least six missiles in the early morning and a seventh some 12 hours later, officials in Japan and South Korea said.
"If one of those missiles came over here, we go to war. That's the fear. There's uneasiness. When there's fear, the market goes down," said Mike O'Hare, head of US equity cash sales and trading for J.P. Morgan Securities in New York.
"This could be like 9-11. War came up, and then everything fell apart."
The Dow Jones industrial average was down 78.84 points, or 0.70 percent, at 11,149.18. The Standard & Poor's 500 Index was down 10.22 points, or 0.80 percent, at 1,269.97. The Nasdaq Composite Index was down 36.92 points, or 1.69 percent, at 2,153.51.
Also putting investors on edge was the monthly ADP National Employment Report, showing strong private-sector employment in June.
The report sharply boosted expectations that the Federal Reserve will raise rates at its August policy-setting meeting, six days after the Fed's most recent policy statement raised hopes of a possible pause.
Investors worry that rising interest rates would hurt consumer spending, slow down the economy and stifle the growth of corporate profits.
Shares of companies sensitive to economic cycles fell, including those of heavy equipment maker Caterpillar Inc, which was the biggest drag on the Dow. Caterpillar shares fell 1.9 percent to $73.33 on the New York Stock Exchange.
On Nasdaq, Apple shares fell 2.4 percent to $56.59, while Microsoft shares fell 1.3 percent to $23.40. The software maker's stock was the biggest drag on the S&P.
US private-sector employers created an estimated 368,000 jobs in June, compared with 122,000 jobs in the previous month, the monthly ADP National Employment Report showed.
The report was released by a unit of Automatic Data Processing, Inc, a large payroll services company based in Roseland, N.J., two days before the government's own job survey of a net gain in non-farm jobs in the US private and public sectors.