By Jonathan Cheng
U.S. stocks edged lower after a weak reading on U.S. private-sector hiring added to concerns over a weakening European economy.
The Dow Jones Industrial Average lost 24 points, or 0.2%, to 13255 in Wednesday afternoon trading. The Standard & Poor's 500-stock index gave up four points, or 0.3%, to 1402, while the Nasdaq Composite edged up six points, or 0.2%, to 3057.
Leading the losses were energy and financial stocks, which are more sensitive to signs of economic improvement and deterioration. Bank of America fell 1.6% and J.P. Morgan Chase lost 1.4%. Alcoa led the Dow decliners, falling 2.5%, while Chevron and Exxon Mobil fell 1.4% and 1.1%, respectively.
The declines came after a report on private-sector job growth in April showed an increase of just 119,000 jobs, well below expectations for 175,000 new jobs and sharply lower than March's downwardly revised gain of 201,000 jobs. The private-sector jobs report is seen as a preview to the closely watched government employment report due on Friday. Separately, factory orders in March declined 1.5% from February, in line with expectations.
"Anyone you slice it, it's still a troubling jobs report and it suggests hiring trend is slowing," said Larry Glazer, managing partner at Mayflower Advisors in Boston. "It's as much an indication of the hiring trend slowing, as it is of expectations being too high."
The weaker U.S. economic data, combined with disappointing readings from Europe, presented a new potential challenge one day after the Dow rose to close at its highest level since Dec. 28, 2007.
"As earnings season ends, those worries in the background about Spain and Europe come back to the forefront," said Cort Gwon, portfolio manager at HudsonView Capital Management.
European markets erased earlier gains to trade flat or lower after the euro-zone manufacturing purchasing manager's index fell to its lowest level since June 2009. Meanwhile, the unemployment rate rose to a euro-era high of 10.9% in March from February's 10.8%. Germany saw its unemployment rate rise for just the second time in 15 months.
With most markets returning from the May Day holiday, the German DAX index fell 0.8% after being up as much as 1.7% earlier in the day. In France, the CAC-40 edged up 0.4% ahead of a televised debate between President Nicolas Sarkozy and Socialist challenger Francois Hollande.
"When you see weak data coming out of Spain, the market is somewhat immune to that because we expect that data to be weak, but when you see it in Germany, like we did today, that's when people get nervous," Glazer said. "Germany is the European success story, and if you see confidence take a leg down in Germany, that will supercede almost anything else going on, including the French election."
Asian bourses were broadly higher on the back of Tuesday's U.S. gains and positive Chinese data released Wednesday. China's Shanghai Composite rallied 1.8% after the manufacturing purchasing manager's index rose to 53.3 in April from 53.1 in March. Japan's Nikkei Stock Average gained 0.3%.
Crude-oil futures declined to about $105.30 a barrel, while gold futures slipped to about $1,650 an ounce. The U.S. dollar surged against the euro and traded flat against the yen. Demand for U.S. Treasurys rose, sending the yield on the benchmark 10-year note back down to 1.9324%.
In corporate news, Chesapeake Energy tumbled 11% to lead S&P 500 decliners, reversing Tuesday's gains, after the natural-gas company's first-quarter earnings and revenue missed expectations.
TripAdvisor led the S&P 500 gainers, surging 17% after the travel site reported first-quarter earnings and revenue that topped analyst projections.
MasterCard slipped 0.8% after the company reported an increase in operating expenses, and paid more in rebates and incentives to attract business. Rival Visa declined 0.6%.
IntercontinentalExchange declined 2.9% after the commodities exchange operator reported muted trade in its futures franchise.
American Eagle Outfitters surged 15% after the teen-apparel retailer raised its first-quarter earnings guidance, pointing to stronger-than-expected sales and easing promotional activity. The company also easily topped revenue expectations.
Charming Shoppes leapt 24% after the apparel retailer agreed to be acquired by Ascena Retail Group for about $890 million in cash. Ascena soared 11%.
CVS Caremark rose 2.8% after the pharmacy chain reported better-than-expected first-quarter earnings and revenue and raised its full-year earnings outlook.
Broadcom edged up 0.1% after the semiconductor company reported first-quarter adjusted earnings and revenue that topped analyst forecasts, but also saw a decline in gross margins.
Homebuilders generally gained after Beazer Homes USA recorded a surge in home closings and sounded a hopeful note for the months ahead. D.R. Horton rose 5.8%, KB Home added 1.8% and NVR gained 2.9%.
Protalix BioTherapeutics climbed 13% after the company said the U.S. Food and Drug Administration approved Protalix, a drug developed with Pfizer, for the treatment of Gaucher disease, a rare genetic disorder. Pfizer slipped 0.6%.