By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks moved sharply lower on
Wednesday, briefly erasing the previous day's modest gains, after a
report on the services sector failed to repair sentiment bruised
after a weak ADP jobs report.
Investors will also pay attention to two Fed officials speaking
later on Wednesday.
The S&P 500 (SPX) fell 16 points, or 0.9%, to 1,744.20. The
Dow Jones Industrial Average (DJI) shed 100 points, or 0.6% to
15,386.13. The Nasdaq Composite (RIXF) dropped 59 points, or 1.5%
to 3,985.86.
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Stocks fell to session lows after the Institute for Supply
Management said U.S. service-sector companies expanded in January
at slightly faster pace, a survey of executives found. The
employment gauge also ticked up, marking the highest level in more
than three years.
Stocks had opened lower after Automatic Data Processing Inc.
said private-sector-employment gains slowed down in January, with
employers adding 175,000 jobs, slightly less than expected, while
the December number was revised down to 227,000. The report comes
ahead of the official non-farm payrolls data due on Friday.
Ian Shepherdson, chief economist at Pantheon Macroeconomics,
says the headline ADP number is depressed by technical factors and
likely understates the official private payroll number.
"We think it likely the official number for January will
overshoot ADP, and we are still looking for private payrolls to
rebound about 225K, recovering some of the lost Dec ground," he
wrote in a note.
Investors will be paying attention to two Fed officials speaking
today for clues about changes in monetary policy. Philadelphia Fed
President Charles Plosser is due to speak on the economy at 12:30
p.m. Eastern Time in Rochester, New York, and Atlanta Fed President
Dennis Lockhart is scheduled to speak on the economic outlook at
1:40 p.m. Eastern Time in Birmingham, Alabama.
Shares of Ralph Lauren Corp. (RL) rallied initially, but gave up
gains after the retailer beat Wall Street expectations and raised
its previous full-year guidance for revenue.
Humana Inc. (HUM) shares slid after the health insurer said it
swung to a fourth-quarter loss, but stuck to its 2014 earnings
guidance.
CVS Caremark Corp. (CVS) shares fell after the drugstore chain
said Wednesday it would stop selling cigarettes and tobacco
products in stores by Oct. 1. CVS said the estimated $2 billion
drop in revenues would not affect 2014 per-share earnings.
Shares of C.H. Robinson Worldwide Inc. (CHRWD) fell sharply
after the company posted a 64% drop in fourth-quarter profit on
Tuesday, missing expectations.
Shares of Automatic Data Processing Inc. (ADP) fell even as the
company reported better-than expected profit and revenue in the
fiscal second quarter.
Merck & Co. Inc.(MRK) shares rose despite the company
announcing a drop in fourth-quarter profit and revenue.
Shares in Tableau Software Inc. (DATA) and Myriad Genetics Inc.
(MYGN) soared after upbeat quarterly results late Tuesday.
Twitter Inc. (TWTR) and Walt Disney Co. (DIS) will release
results after the market close.
In other markets, European stocks erased gains after the ADP
report. Stocks stabilized in Asia. Gold and oil prices moved
higher, while the dollar extended losses after a report on
private-sector employment showed a slower pace of growth than
expected.
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