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 by
a weak ADP jobs report.
As volatility has been rising steadily, some analysts say the
main indexes are in a midst of a correction and have further to
fall. The Dow Average is down more than 7% from its peak. The
benchmark S&P 500 is down 5.7% from its all-time high.
The S&P 500 (SPX) fell 12 points, or 0.7%, to 1,743.20. The
Dow Jones Industrial Average (DJI) shed 48 points, or 0.3% to
15,398.13. The Nasdaq Composite (RIXF) dropped 47 points, or 1.2%
to 3,983.86.
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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 a 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.
"Even though it was the emerging markets that triggered recent
selling, concerns have shifted to the U.S. economy and recent data
have been disappointing," said Nicholas Colas, chief market
strategist at ConvergEx Group, a global brokerage company based in
New York.
"Volatility has moved to 'old normal' levels, which means more
downturns in near future as we are in the midst of a correction,"
Colas said.
"Money outflows year-to-date have been quite big, as investors
withdrew $22.5 billion from all U.S. listed ETFs, most of it from
the highly liquid SPDR S&P 500 ETF Trust (SPY). We had a big
rally last year and it is time to pay some of that back, which is
normal in the markets," he added.
Implied volatility on the S&P 500 as measured by the CBOE
Vix index rose to 20, which is close to the 30-year average.
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 C.H. Robinson Worldwide Inc. (CHRWD) fell sharply
after the company posted a 64% drop in fourth-quarter profit on
Tuesday, missing expectations.
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 in Genworth Financial Inc. (GNW) rallied after the
company reported a 24% rise in fourth-quarter profit, beating
expectations.
Humana Inc. (HUM) shares slid after the health insurer said it
swung to a fourth-quarter loss, but stuck to its 2014 earnings
guidance.
Merck & Co. Inc.(MRK) shares rose after the company said it
entered three separate collaboration agreements with peers to
evaluate its investigational immunotherapy cancer treatment.
Earlier, the company announced a drop in fourth-quarter profit and
revenue missing expectations.
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.
More stories from MarketWatch:
Greenhaus: S&P pullback is 'normal' so far
8 stock indexes around the globe facing corrections
Volatility Index raises caution flag for market bears
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