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.
Stock indexes remained deeply under water after the release of
the Federal Reserve's so-called Beige Book, which found the U.S.
economy to be still growing at a "modest to moderate" pace.
"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 Fed would
begin tapering its $85 billion in monthly bond purchases.
After tumbling 199 points, the Dow Jones Industrial Average
(DJI) was lately off 186.07 points at 14,991.47, with Alcoa Inc.
(AA) 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 and financials leading losses that included 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 0.9% 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 2.1% 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 34.95 points to 3,410.31.
For every share rising, nearly four fell on the New York Stock
Exchange, where 377 million shares traded as of 2:10 p.m.
Eastern.
Composite volume surpassed 2.2 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 2.101%.
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.
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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