Wall Street falls for 3rd day; economic worries weigh
U.S. stocks fell for a third day on Wednesday as weaker-than-expected economic data and more losses in top-performing commodity sectors cast doubt on how much life a market rally had left.
The data on U.S. private-sector jobs and the services sector prompted caution ahead of Friday's key jobs report, perhaps the most widely watched U.S. economic indicator.
Friday's jobs report will be important, said Michael Sheldon, chief market strategist, RDM Financial, Westport, Connecticut. If we get (200,000 job gains) or above, it will reinforce the idea the economy continues to expand. A Reuters poll forecast non-farm job gains of 186,000 for the month of April and private payroll gains of 200,000.
The S&P energy sector <.GSPE>, which was up 34 percent since September, dropped 1.2 percent on Wednesday, while materials <.GSPM> fell 1.3 percent and industrials <.GSPI> lost 1.1 percent.
Analysts said technicals for the overall market indicated further underlying support. But investor sentiment appeared to have turned more bearish, signaling at least a pause in the rally that began in early September.
There's been a scarcity of new lows (for indexes) ... all of this suggests the technical underpinnings for the market are fairly positive. But I wouldn't be surprised to see a period of sideways trading or profit-taking, Sheldon said.
At the same time, the VIX volatility index <.VIX>, Wall Street's fear gauge, is showing signs of strength.
It was up 1.8 percent at 17 on Wednesday. This is the problem area, a potential new uptrend in the VIX, said Larry McMillan, president of McMillan Analysis Corp in a report. The longer it holds above 16, the more the danger grows.
The Dow Jones industrial average <.DJI> was down 66.26 points, or 0.52 percent, at 12,741.25. The Standard & Poor's 500 Index <.SPX> was down 7.04 points, or 0.52 percent, at 1,349.58. The Nasdaq Composite Index <.IXIC> was down 5.15 points, or 0.18 percent, at 2,836.47.
It was a third day of losses for the S&P 500 and Nasdaq, though the S&P 500 is up 29 percent since the start of September.
In the latest data, the Institute for Supply Management's services index fell last month well below forecasts, while U.S. private employers added fewer jobs than expected in April.
In deal news, chip equipment maker Applied Materials Inc
Varian shares surged 51 percent to $61.28, and Applied Materials dipped 0.6 percent to $15.15.
ConAgra Foods Inc
Shares of ConAgra rose 2.6 percent to $25.39, while Ralcorp, which owns the Post cereal brand, jumped 4.4 percent to $87.03.
(Additional reporting by Doris Frankel; reporting by Caroline Valetkevitch; editing by Kenneth Barry and Jeffrey Benkoe)
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