By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- The U.S. stock market traded in a
choppy but narrow range on Wednesday, as investors reacted mildly
to a slew of disappointing and inconclusive economic reports.
According to the Federal Reserve's Beige Book U.S. economic
conditions in January and early February were difficult to discern
due to severe cold weather. In sector after sector and region after
region, the weather wreaked havoc on conditions, the report
said.
Before the bell, a report from Automatic Data Processing showed
the private sector added fewer jobs than expected as severe winter
weather continued to affect hiring.
After the open, a survey of executives showed U.S.
service-sector companies expanded in February at a sharply slower
pace, and bad weather was only part of the problem.
The main indexes reacted mildly to the Beige Book and
disappointing employment and services-sector reports and struggled
to build on the previous day's rally. The S&P 500 and Russell
2000 on Tuesday closed at record levels after gaining 1.5% and
2.8%, respectively, their best day of the year.
The S&P 500 (SPX) was a point lower at 1,873.20, hovering at
near-record levels.
The Dow Jones Industrial Average (DJI) shed 42.77 points, or
0.3%, to 16,353.37.
The Nasdaq Composite (RIXF) was up 5 points, or 0.1%, at
4,357.34. The Russell 2000 (RUT) dropped 5 points, or 0.4% to
1,203.99, pulling away from its all-time high level reached on
Tuesday.
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"Investors are ignoring current economic reports because it is
impossible to tell how much the cold and snowy weather was a factor
in continued weakness," said Kate Warne, investment strategist at
Edward Jones.
"After a big relief rally on Tuesday, markets are taking a pause
and are likely to muddle through until the official jobs report on
Friday," she added.
The Beige Book said that eight of the 12 Fed districts reported
that economic conditions continued to expand though Feb. 24. The
assessment is not likely to stop the Fed from continuing its steady
reduction in monthly asset purchases.
Private-sector-employment gains slightly picked up in February,
but remained slow, hit by unusually poor weather, Automatic Data
Processing Inc. reported Wednesday. Private-sector employers added
139,000 jobs last month, up from 127,000 in January, but down from
205,000 in February 2013, according to ADP.
Ian Shepherdson, chief economist at Pantheon Macroeconomics,
wrote that the report was weak, but distorted by the impact of the
soft January official data, which was reduced.
The Institute for Supply Management said its nonmanufacturing
index dropped to 51.6% last month from 54% in January. That was
well below the 53% forecast of economists surveyed by MarketWatch.
The employment gauge tumbled nearly 9 points to 47.5%, marking the
lowest level since March 2010 as severe weather hindered hiring in
some sectors such as construction and wholesale trade.
The Fed will release its Beige Book survey of economic
conditions at 2 p.m. Eastern, and a handful of Fed speakers are on
the docket.
Smith & Wesson surges, HCI Group drops
Among individual stocks, shares of (SWB) jumped 18% after the
gun maker topped Wall Street's forecasts and raised its estimates
for the year late Tuesday.
Brown-Forman Corp. (BFA) posted a 5% sales rise and lifted its
full-year earnings per share view. Shares in the liquor and
winemaker rose 3.8%.
PetSmart Inc. (PETM)(PETM) shares fell 1.2% after fourth-quarter
earnings fell by less than expected.
Hovnanian Enterprises Inc. (HOV) shares were down 9.2% after
quarterly results missed expectations.
HCI Group Inc. (HCI) shares fell 17% after the insurer posted
earnings late Tuesday.
In overseas markets, Europe's benchmark stock index moved lower
on Wednesday, pulling back after its biggest rally in eight months.
The benchmark Stoxx Europe 600 index was down 0.1%.
Asian stocks had a mixed session. The Nikkei 225 index rose
1.2%, but the China Shanghai Composite fell 0.9%. At the start of
China's annual meeting of the legislature, the National People's
Congress, officials said the government will hold its economic
growth target at 7.5% in 2014, showing no change from 2012 or
2013.
Oil prices were lower while gold recovered earlier losses.
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