Corrected: Wall St falls as data, outlooks spur profit taking
(Corrects final paragraph on timing of factory orders)
NEW YORK - U.S. stocks fell on Wednesday as weak data and some disappointing outlooks prompted investors to take profits after a four-day rally that pushed the market to nine-month highs.
Investors paused to assess the sustainability of a rally that has driven the S&P 500 up nearly 48 percent since hitting a 12-year closing low in early March.
Earlier on Wednesday, the Institute for Supply Management's service index fell more than expected in July, dropping to 46.4. Any reading below 50 indicates contraction in the service sector, which accounts for about 80 percent of economic activity in the United States.
Investors' sentiment also soured after ADP data showed that private employers cut 371,000 jobs in July, more than expected, suggesting the labor market remained weak.
When you get negative data, that's going to cause some profit taking, said Frank Lesh, a futures analyst at FuturePath Trading LLC in Chicago. Lately data has been better than expected and we want to see continued improvement, but when you see a pause in the improvement, it gives you anxiety about how strong the recovery could be.
Despite that, Lesh said that if Friday's July non-farm payroll report comes in better than expected, the markets will be right back up again.
The Dow Jones industrial average <.DJI> dropped 62.80 points, or 0.67 percent, to 9,257.39. The Standard & Poor's 500 Index <.SPX> fell 6.22 points, or 0.62 percent, to 999.43. The Nasdaq Composite Index <.IXIC> shed 25.34 points, or 1.26 percent, to 1,985.97.
The top drag on the blue-chip Dow average was consumer products giant Procter & Gamble
, which earlier Wednesday said its first-quarter profit may not meet Wall Street's expectations. P&G's stock dove 2.9 percent to $53.84.
In other earnings news, Dean Foods
I think investors are a little rattled about some of the outlooks that came out this morning. That could be causing some of the profit taking, said John O'Brien, senior vice president at MKM Partners LLC in Chicago.
Elsewhere, both Baker Hughes
Meat supplier Tyson Foods Inc
Among Nasdaq stocks, R.R. Donnelley & Sons
In a splash of positive data after the regular trading session began, the Commerce Department said new orders received by U.S. factories unexpectedly rose in June, advancing for a third-straight month.
(Reporting by Ryan Vlastelica; Editing by Jan Paschal)
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