The third-quarter rally lost its legs early Wednesday as North Korea's missile tests left bears back in control. Index futures recently showed both the S&P 500 and Nasdaq 100 trading 5 points below fair value. The 10-year Treasury bond was down 5/32 in price to yield 5.17%, while the dollar rose against the yen and euro. Gold also climbed as investors sought safe havens amid geopolitical tensions. On Tuesday, North Korea fired at least six missiles over the Sea of Japan in defiance of U.N. warnings about weapons testing. Only one of the missiles is believed to be capable of reaching U.S. soil, and that one fell into the ocean less than a minute after takeoff. Gold gained $13.30 to $629.30 an ounce, while copper added 8 cents to $3.44 a pound and silver rose 46 cents to $11.38 an ounce. Crude, which is already up 20% this year because of a nuclear research standoff with Iran, bucked the trend and fell 13 cents to $73.80 a barrel on the August contract. Overseas stocks fell. London's FTSE 100 was recently down 0.7% to 5845 while Germany's Xetra DAX lost 0.9% to 5680. In Asia, Japan's Nikkei fell 0.7% to 15,524, while Hong Kong's Hang Seng dipped 0.6% to 16,267. On Monday, U.S. stocks rose as investors rotated into long positions on the quarter's first day. During a holiday-shortened session, the Dow Jones Industrial Average rose 0.7% to 11,228, while the S&P 500 gained 0.8% to 1280 and the Nasdaq Composite added 0.8% to 2190. A 1.3% decline in General Motors ( GM) tempered the Dow's gain on Monday. On Wednesday, reports emerged that GM CEO Rick Wagoner will meet with Renault-Nissan CEO Carlos Ghosn later this month to discuss a three-way alliance that was first floated last week by Kirk Kerkorian. Kerkorian's Tracinda Corp. owns about 10% of GM's stock. To view Ana Dane's video take on today's premarket action,
click here .
Wednesday's main economic report is factory orders from the Commerce Department. Economists see a 0.1% rise in May compared with a 1.8% decline in April. On Thursday, the Institute for Supply Management releases its services index for June, while Friday will see the Labor Department's employment report. In ratings news, Citigroup raised McGraw-Hill ( MHP) to buy, saying vibrant securities markets should keep its Standard & Poor's unit humming with bond-rating business. Citi also sees continuing strength in school textbooks. Mercury Interactive ( MERQ), the Mountain View, Calif., business software company, said the Securities and Exchange Commission is weighing enforcement actions against three directors in the options backdating scandal. Mercury also disclosed a three-year earnings restatement related to the investigation.