* Oil rises on tension about Iran's nuclear work
* Hefty loss at GM adds to U.S. auto sector woes
* Biogen sinks biotechs, pulls down Nasdaq
* Dow down 0.5 pct, Nasdaq off 0.7 pct, S&P off 0.6 pct
(Updates to afternoon)
NEW YORK, Aug 1 (Reuters) - U.S. stocks fell on Friday as a
rise in oil prices and a hefty quarterly loss from General
Motors <GM.N> stoked fear that the economy is slouching toward
recession and soured the outlook for corporate earnings.
A government report showing U.S. employers cut jobs for the
seventh straight month in July added to market worries. The
report also showed the jobless rate jumped to its highest in
four years. For more see [].
Other standout losers included shares of big manufacturers,
including Caterpillar <CAT.N>, down 2 percent, and technology
shares, with Microsoft Corp <MSFT.O> down 1.3 percent.
Shares of natural resource companies, including miners,
were another notable casualty, with aluminum producer Alcoa
<AA.N> down 4.4 percent as global metal prices fell.
U.S. front-month crude oil <CLc1> rose 0.9 percent to
$125.18 a barrel as geopolitical concerns fanned supply worries
after Israeli Deputy Prime Minister Shaul Mofaz said Iran was
heading toward a major breakthrough in its nuclear program.
[].
Rising oil prices weigh on consumer spending and saddle
business with higher energy costs, dimming the profit outlook.
"The stock market is down because oil went back up," said
Frederic Dickson, senior vice president and market strategist
at D.A. Davidson & Co in Lake Oswego, Oregon. "We have more
market tension with oil than with the employment report."
The Dow Jones industrial average <> was down 69.12
points, or 0.61 percent, at 11,308.90. The Standard & Poor's
500 Index <.SPX> was down 8.55 points, or 0.67 percent, at
1,258.83. The Nasdaq Composite Index <> was down 18.69
points, or 0.80 percent, at 2,306.86
Shares of General Motors <GM.N> fell 6.4 percent to $10.36
after the No. 1 U.S. automaker posted a second-quarter loss of
$15.5 billion, or $6.3 billion excluding one-time items, much
worse than forecast. [].
"The auto sector is a disaster," said Dickson.
Other laggards included Caterpillar, the maker of
bulldozers and excavators, which fell 2 percent to $68.16 on
the New York Stock Exchange, while Alcoa shares slid to $32.29,
down 4.3 percent.
On Nasdaq, the biggest drag came from Biogen <BIIB.O>, a
biotechnology company. Its stock slid nearly 27 percent to
$51.05 after two new brain disease cases were detected in
patients taking Tysabri, a multiple sclerosis drug jointly
manufactured with its Irish partner Elan <ELN.I><ELN.N>.
[].
Shares of Sun Microsystems <JAVA.O> lost 12.5 percent to
$9.30 after the world's No. 4 business computer maker warned
about the business outlook.
The losses all came on another day of worrisome economic
data. The nonfarm payrolls report showed employers cut 51,000
jobs in July. That was fewer than the 75,000 loss forecast by
analysts but marked the seventh straight month of job losses.
The unemployment rate also rose to 5.7 percent, a four-year
high, from 5.5 percent in June.
"We've never had that big an increase (in the unemployment
rate) where it wasn't called a recession," said David Wyss,
chief economist of Standard & Poor's in New York. "My opinion
remains the same. We're in a recession. It's going to be a mild
recession one but a long one."
(Reporting by Steven C. Johnson; Additional reporting by Ellis
Mnyandu; Editing by James Dalgleish)
