Wall Street reversed course after a strong opening and ended lower on Wednesday as the market digested another dose of troubling economic and corporate news.
The Dow Jones Industrial Average dropped 121.70 points (1.51 percent) to close at 7,956.66, unable to hold early gains.
The Nasdaq composite dipped 1.25 points (0.08 percent) to 1,515.05 while the broad-market Standard & Poor's 500 index lost 6.28 points (0.75 percent) to 832.23.
The market reacted to a survey from payroll firm ADP showing 522,000 private sector jobs lost in January, suggesting the labour market remains under heavy pressure from retrenching businesses.
Stocks perked up briefly after a survey on the vast US services sector, which makes up the bulk of economic activity, came in slightly better than expected.
The Institute for Supply Management said its non-manufacturing index rose to 42.9 percent from 40.1 percent in December. The business activity index rose to 44.2 percent from 38.9 percent.
The survey, like a similar one on manufacturing, remained below the level of 50 percent, indicating contraction, but suggested a bottoming trend in economic activity, said analysts.
"While both this survey and its manufacturing cousin point to a continued sharp contraction in economic activity in January, both surveys also hint that the rate of decline in output may be easing slightly," said John Ryding at RDQ Economics.
But analysts said the labour market remained under pressure, which would delay any economic recovery.
Aaron Smith at Economy.com, said he now expects Friday's payrolls report to show a loss of 505,000 positions, making a recovery from the recession more difficult.
"This week's bad news on the jobs front is a reminder that the pace of business retrenchment remains intense," he said.
"This retreat is a typical attempt to preserve profitability in a weakening economy, and it is being magnified by the credit crunch, a secondary factor forcing businesses to slash spending."
Briefing.com analysts said that market was "unable to secure support at key levels," and fell under renewed selling pressure.
The market also appeared unsettled by the slow progress of President Barack Obama's plan for a 900-billion-dollar economic stimulus, which appeared snagged in the US Senate.
"Onlookers cited uncertainty ahead of the Obama administration's plan for troubled assets and financial companies, which is expected next week, as the reason for financial under-performance," said Dendra Lambert at Hilliard Lyons.
"Consumer stocks were also weak following some disheartening earnings news from industry leaders," such as Kraft Foods, Lambert added.
Kraft led the blue chips lower, sliding 3.2 percent to 43.49 dollars after the company reported a 72 percent drop in fourth-quarter net profit that was well below forecasts.
Time Warner also disappointed the market as the media-entertainment giant reported a quarterly loss of 16 billion dollars which was worse than expected even after hefty writedowns. Its shares fell 3.68 percent to 9.42 dollars.
Bank of America dragged down the finance sector, tumbling 11.32 percent to 4.70 dollars amid worries about the government rescue of the banking industry. Rival Wells Fargo lost 3.99 percent to 17.45.
The tech sector fared better. Electronic Arts rallied 11.42 percent to 17.27 dollars after the video game giant reported a loss based on one-time costs in results that were better than expected.
Cisco Systems, one of the tech bellwethers, rallied 1.41 percent to 15.84 dollars ahead of its earnings report. After the close, the networking giant reported profits in the past quarter fell 27 percent to 1.5 billion dollars, a figure better than expected.
Bonds fell. The yield on the 10-year US Treasury bond rose to 2.914 percent from 2.842 percent on Tuesday and that on the 30-year bond to 3.673 percent from 3.623 percent. Bond yields and prices move in opposite directions.
The Dow Jones Industrial Average dropped 121.70 points (1.51 percent) to close at 7,956.66, unable to hold early gains.
The Nasdaq composite dipped 1.25 points (0.08 percent) to 1,515.05 while the broad-market Standard & Poor's 500 index lost 6.28 points (0.75 percent) to 832.23.
The market reacted to a survey from payroll firm ADP showing 522,000 private sector jobs lost in January, suggesting the labour market remains under heavy pressure from retrenching businesses.
Stocks perked up briefly after a survey on the vast US services sector, which makes up the bulk of economic activity, came in slightly better than expected.
The Institute for Supply Management said its non-manufacturing index rose to 42.9 percent from 40.1 percent in December. The business activity index rose to 44.2 percent from 38.9 percent.
The survey, like a similar one on manufacturing, remained below the level of 50 percent, indicating contraction, but suggested a bottoming trend in economic activity, said analysts.
"While both this survey and its manufacturing cousin point to a continued sharp contraction in economic activity in January, both surveys also hint that the rate of decline in output may be easing slightly," said John Ryding at RDQ Economics.
But analysts said the labour market remained under pressure, which would delay any economic recovery.
Aaron Smith at Economy.com, said he now expects Friday's payrolls report to show a loss of 505,000 positions, making a recovery from the recession more difficult.
"This week's bad news on the jobs front is a reminder that the pace of business retrenchment remains intense," he said.
"This retreat is a typical attempt to preserve profitability in a weakening economy, and it is being magnified by the credit crunch, a secondary factor forcing businesses to slash spending."
Briefing.com analysts said that market was "unable to secure support at key levels," and fell under renewed selling pressure.
The market also appeared unsettled by the slow progress of President Barack Obama's plan for a 900-billion-dollar economic stimulus, which appeared snagged in the US Senate.
"Onlookers cited uncertainty ahead of the Obama administration's plan for troubled assets and financial companies, which is expected next week, as the reason for financial under-performance," said Dendra Lambert at Hilliard Lyons.
"Consumer stocks were also weak following some disheartening earnings news from industry leaders," such as Kraft Foods, Lambert added.
Kraft led the blue chips lower, sliding 3.2 percent to 43.49 dollars after the company reported a 72 percent drop in fourth-quarter net profit that was well below forecasts.
Time Warner also disappointed the market as the media-entertainment giant reported a quarterly loss of 16 billion dollars which was worse than expected even after hefty writedowns. Its shares fell 3.68 percent to 9.42 dollars.
Bank of America dragged down the finance sector, tumbling 11.32 percent to 4.70 dollars amid worries about the government rescue of the banking industry. Rival Wells Fargo lost 3.99 percent to 17.45.
The tech sector fared better. Electronic Arts rallied 11.42 percent to 17.27 dollars after the video game giant reported a loss based on one-time costs in results that were better than expected.
Cisco Systems, one of the tech bellwethers, rallied 1.41 percent to 15.84 dollars ahead of its earnings report. After the close, the networking giant reported profits in the past quarter fell 27 percent to 1.5 billion dollars, a figure better than expected.
Bonds fell. The yield on the 10-year US Treasury bond rose to 2.914 percent from 2.842 percent on Tuesday and that on the 30-year bond to 3.673 percent from 3.623 percent. Bond yields and prices move in opposite directions.
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