Economic Data Weigh on Stocks
Stocks fell nearly across the board on Wednesday after lackluster data on the job market and the service sector suggested the economy's recovery may not be as rapid as some investors had hoped.
The Dow Jones Industrial Average was recently off 78 points at 9242, on track to snap a four-day winning streak. It was hurt by a decline of almost 3% in Procter & Gamble after it reported a 18% decline in its net and projected further declines in sales in the current quarter.
![[Markets Data]](http://s.wsj.net/public/resources/images/MDGpromo_D01222009151210.jpg)
Data from the consulting firm Automatic Data Processing and Macroeconomic Advisors showed the private sector shed 371,000 jobs last month, a slowing but still-brisk pace of job losses. The report comes ahead of the government's July jobs report, due Friday.
A report on the U.S. service sector was also weaker than expected. The Institute for Supply Management said its monthly index of nonmanufacturing activity was 46.4 in July, down from 47.0 in June, indicating a quickening contraction in activity.
"The market has been riding this wave of optimism with people looking for a second-half recovery," said Peter Boockvar, managing director at the New York trading firm Miller Tabak. "But both of these reports today represented a dose of reality, showing that this process on the way to recovery is going to be a slow one."
The S&P 500 was off 0.8%, hurt by declines in all its sectors but financials. That category rose 1.5%, helped in part by rebounds in several hard-hit names. American International Group rose more than 27% to trade above $17 a share. CIT Group was up nearly 28% to $1.29 after sweetening the terms of an offer to buy back $1 billion of bonds maturing this month at a discount as it battles to restructure its debt out of court.
The S&P's basic-materials category also was relatively unscathed, down just 0.4%. But selling in the index was otherwise pretty uniform, with every other S&P category off about 1%.
The technology-focused Nasdaq Composite Index was down 1.3%. Cisco Systems, a component of all three major indexes, was down 1.7% ahead of its earnings report due after the bell.
Some investors are still taking a breather after the market's summer rally. Major indexes came into Wednesday at their highest levels since the fall.
Strategist Phil Guarco, of J.P. Morgan Private Bank, said that his firm has been putting more of its clients' cash to work in both debt and stocks, including a more aggressive push into small-capitalization stocks that have lagged the recent rally.
While Mr. Guarco said a broader global recovery is under way, he's still on guard against the lingering effects of the recession's final stages, including weakness in the employment sector.
"It's a tactical trade," he said of the increased small-cap holdings. "If we get the gains we're looking for in three to six months, we'll back out."
Among stocks to watch, Whole Foods Market rose 16% after the company increased its earnings forecast. Fortress Investment Group was up 1% after the firm said that its loss narrowed in its most recent quarter.
The broader stock market's weakness sent some investors to Treasurys as a safe-haven play. The two-year note was up 3/32 to yield 1.160%. The 10-year note was up 5/32 to yield 3.669%.
European stocks fell. Asian stocks were more downbeat, with the Nikkei 225 falling 1.2% and the Hang Seng falling 1.4%.
The dollar fell against the yen and rose against the euro. The U.S. Dollar Index slipped 0.1%.
Oil prices fell $1.03 to $70.39 per barrel in New York following the release of data showing a bigger rise in U.S. stockpiles of crude than analysts expected. Gold, coffee, and livestock also traded lower, though copper, corn and soybeans managed to post gains. The DJ-UBS Commodity Index was up 0.7%.
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