NEW YORK (AP) — Stocks fell early Tuesday after North Korea and South Korea exchanged artillery fire near their disputed sea border, killing at least two South Korean marines. Treasury prices and the dollar rose as investors sought safe places to park money.
A weak reading on existing home sales for October also dragged stocks lower. Shares were also falling in Europe on concerns that a bailout of Ireland may not be enough to contain Europe’s debt crisis. Borrowing costs for Portugal and Spain rose, leading Spain to trim the size of a debt sale.
The Dow Jones industrial average fell 135, or 1.2 percent, to 11,042 in morning trading.
The Standard & Poor’s 500 lost 11, or 0.9 percent, to 1,186. The Nasdaq composite index fell 33, or 1.3 percent, to 2,499.
Hewlett-Packard Co. was the only one of the 30 stocks that make up the Dow Jones industrial average to rise. Shares gained 1.4 percent after the technology company beat Wall Street’s expectations for revenue and income thanks to strong corporate spending.
Energy shares led the decline as the price of crude oil fell. ExxonMobil Corp. was the biggest loser in the Dow, falling 2.6 percent. Chevron Corp. was not far behind with a loss of 2.5 percent. Crude oil fell 88 cents to $80.85.
Shares of Netflix Inc. rose 1 percent after the movie rental company announced a new pricing structure aimed at weaning customers off DVDs. The company announced a cheap plan that offers movies and TV shows only through online streaming.
In economic news, sales of previously owned houses dipped 2.2 percent in October, according to the National Association of Realtors. That puts sales at a seasonally adjusted rate of 4.43 million units. Economists had expected a rate of 4.5 million.
Stocks received little support from an upward revision of U.S. economic growth. Before trading opened, the government reported that gross domestic produce expanded at an annual rate of 2.5 percent in the third quarter, up from an earlier estimate of 2 percent.
The clash between North and South Korea was one of the most dramatic between the two rivals since the end of the Korean war and one of the few to put civilians at risk. Sixteen South Korean soldiers and three civilians were injured in the artillery exchanges.
The escalating tensions came shortly after the reclusive North Korean regime claimed to have a new uranium enrichment facility and six weeks after the country’s leader Kim Jong Il anointed his youngest son as his heir apparent. The dollar rose 1 percent against an index of six other currencies and the euro fell 1.4 percent against the dollar, to $1.34.
Overseas markets also fell in reaction to the escalation of tensions. Hong Kong’s Hang Seng index dropped 2.6 percent. Japan’s markets were closed for a holiday. In Europe, France’s CAC-40 fell 1.8 percent, Germany’s DAX fell 1.3 percent and the FT-SE in Britain fell 1.1 percent.
All the turmoil overseas gave Treasury prices a lift as investors sought safety. The yield on the 10-year Treasury slipped to 2.74 percent, down from 2.80 percent late Monday. Bond yields fall when prices rise.
With the trading week shortened by the Thanksgiving holiday, investors have to digest roughly five days of economic data squeezed into three days. On Wednesday reports are due out on weekly claims for unemployment benefits, durable goods and personal income.