US stocks: Shares slide on oil, North Korea and earnings

NEW YORK - US stocks slid on Friday, as a jump in oil prices, some disappointing earnings news and a report that North Korea could be preparing for a nuclear weapons test gave investors further incentive to sell.

Retailer Costco Wholesale Corp and photography icon Eastman Kodak Co. were among companies helping douse sentiment a day after major gains.

Meanwhile, oil prices surged back above $55 a barrel, with crude for June delivery up $1.19 to settle at $55.39 a barrel. Rising oil prices raise concerns that higher energy costs will pinch corporate profits and curb consumer spending.

US stocks extended their slide late in the session, after the Wall Street Journal reported on its website that the United States has warned China "quietly that North Korea could be preparing for a nuclear weapons test. "

"The market was weak before and this just added to it. It's another piece of bad news," said Elliot Spar, market strategist at Ryan Beck & Co.

The Dow Jones industrial average was down 60.89 points, or 0.60 per cent, to end at 10,157.71. The Standard & Poor's 500 Index was down 7.83 points, or 0.68 per cent, to close at 1,152.12. The Nasdaq Composite Index was down 30.22 points, or 1.54 per cent, to finish at 1,932.19.

The decline came a day after a major rally by all three stock indexes and ended a tumultuous week for investors.

On Wednesday, the Dow was a hairsbreadth from ducking under the psychologically important 10,000 level. But on Thursday, the Dow surged by its largest amount in two years.

For the week, the Dow ended up 0.70 per cent, the S&P 500 edged up 0.83 per cent, and Nasdaq was up 1.26 per cent.

"The market's tired," said Scott Lynch, managing director of US trading at CSFB. "The market opened down and stayed in a downish mode for most of the day. It fought to try and get back, but there was no real catalyst to take the market to the upside. "

However, the stock indexes ended off their lows for the day. The North Korea report sparked a sell-off, "but once the market digested the headlines, people felt less anxious about the news," said Brian Williamson, vice president, equity trading, at The Boston Co. Asset Management.

A senior administration officer later said the United States has not seen certain evidence that North Korea is preparing for a nuclear weapons test, although it has seen "interesting" activity.

Among stocks falling was Costco, the largest US warehouse club operator, down $3.85 at $40.17 after it said third- and fourth-quarter earnings would likely miss Wall Street's forecasts.

Eastman Kodak, the No. 1 maker of photographic film, weighed on the S&P 500, falling 9.4 per cent, or $2.85 to $27.55 as it posted a quarterly net loss. Kodak said sales in its traditional film business fell faster than expected.

But shares of McDonald's Corp. rose 21 cents to $30.06. AG Edwards raised its rating on the fast-food chain and Dow component to "buy" from "hold. "

Internet search company Google Inc. surged $11.59, or 5.7 per cent, to $215.81, a day after it reported a quarterly profit that sailed past Wall Street's expectations.

In other news, shares of the Nasdaq Stock Market Inc. surged 26 per cent, or $2.78 to $13.43 after the company and a consortium of investors said they had reached an agreement to purchase Instinet Group Inc. from its majority owner, Reuters Group Plc, for $1.88 billion. Instinet fell 9 per cent, or 51 cents to $5.19.

On Wednesday, the New York Stock Exchange struck a deal to merge with electronic market Archipelago Holdings Inc.

Maytag Corp., a maker of washing machines and other home appliances, fell 28 per cent, or $4.21 to $10.89 -- making it the biggest percentage loser on the NYSE.

On Friday, Maytag reported its quarterly profit plunged on lower sales, higher steel prices and higher energy costs, and slashed its full-year outlook. Later in the day, Standard & Poor's cut Maytag's debt ratings to junk, citing its challenges in restoring market share and profit margins.

Trading was moderate, with 1.68 billion shares changing hands on the New York Stock Exchange, just above the 1.46 billion daily average for last year. About 1.85 billion shares were traded on Nasdaq, slightly above the 1.81 billion daily average last year

The number of declining shares outpaced those that rose by a ratio of about 5 to 3 on the NYSE. Decliners led advancers by about 7 to 3 on Nasdaq.

- REUTERS