By Kate Gibson, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks declined sharply on
Wednesday, extending losses into a second session, as data on U.S.
private-sector job growth and productivity fell short of
expectations.
"More attention is being brought to the economic data, so
everyone can play Nostradamus and guess what the Fed's next move
will be," Mark Luschini, chief investment strategist at Janney
Montgomery Scott, said of ongoing guessing as to when the Federal
Reserve would begin tapering its $85 billion in monthly bond
purchases.
The Dow Jones Industrial Average (DJI) fell 159.56 points to
15,018, with Intel Corp. (INTC) pacing declines that included 29 of
its 30 components.
The S&P 500 index (SPX) declined 17.80 points to 1,613.58,
with materials leading losses among all of its 10 major industry
groups.
A Dell Inc. (DELL) board panel found Carl Icahn's takeover bid
to be short due to an estimated $3.9 billion funding deficit
necessary to pay a proposed dividend and operate the PC maker.
Apple Inc. (AAPL) shares shed 0.8% after the International Trade
Commission found the iPhone maker infringed on a Samsung
Electronics Co. patent, with Apple facing a possible import ban on
some products.
General Motors Co. (GM.XX) fell 2% after the U.S. Treasury said
it would sell 30 million more shares of the car manufacturer's
common stock.
The Nasdaq Composite (RIXF) fell 35.07 points to 3,409.96.
For every share rising, more than three lost ground on the New
York Stock Exchange, where 280 million shares traded as of 12:30
p.m. Eastern.
Composite volume surpassed 1.6 billion.
Gold(GCQ3) and oil (CLN3) prices rose; the U.S. dollar(DXY)
declined and the yield on the 10-year Treasury note
(TICKER:10_YEAR) used in determining mortgage rates and other
consumer loans fell to 2.095%.
U.S. companies created 135,000 jobs in May, according to ADP
Employer Services.
"The market is in the midst of a bit of a correction, so the
bias is lower anyway. But with the ADP report being as
underwhelming as it was, there is an increasing loss of enthusiasm
for equities at the moment," said Janney Montgomery Scott's
Luschini.
Revised government figures showed productivity rising 0.5% in
the January-to-March period, and hourly compensation falling 3.8%.
Wednesday's data came ahead of Friday's monthly nonfarm-payrolls
report, and added credence to the view that a soft labor market
would extend the time frame before the Federal Reserve begins
tapering its bond purchases.
"The market is playing wait-and-see with Friday's numbers, but
certainly the ADP number that came out showed there is probably
moderate downside risk to that May employment number," said Sean
Lynch, global investment strategist for Wells Fargo Private
Bank.
Another report, this one from the Institute for Supply
Management, found a slight acceleration in service-sector activity
in May.
Also Wednesday, the Commerce Department reported orders for
goods made by U.S. factories rose 1% in April.
At 2 p.m. Eastern, the Fed's Beige Book of anecdotes about the
economy, which is prepared ahead of an interest-rate decision, will
be released. The last Beige Book said the U.S. economy expanded at
a "moderate" pace.
A 20-Tuesday-long win streak for the Dow industrials was
derailed, with the index falling 76.49 points, or 0.5%, to end at
15,177.54. Fears over when the Federal Reserve will begin to pull
back on its bond-buying program weighed on sentiment.
On Tuesday, Fed Bank of Kansas City President Esther George
advocated for the Fed to pare back its bond-buying program, and
Dallas Fed President Richard Fisher stepped up his criticism of the
Fed's easy-money program.
Strategists at Credit Suisse said Wednesday that they see 15%
more upside for stocks. They lifted their S&P 500 (SPX)
year-end target to 1,730 from 1,640 and introduced a new target of
1,900 for the end of 2014. The strategists gave five reasons for
staying overweight in equities, including an overly pessimistic
view on when the Fed will curb its bond-buying program. (Read more
on Credit Suisse's equity call:
http://blogs.marketwatch.com/thetell/2013/06/05/credit-suisse-another-15-upside-for-stocks-and-get-over-tapering-already/.)
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