By Kate Gibson

NEW YORK (MarketWatch) -- U.S. stocks mostly fell Wednesday, with only the Dow industrials managing a modest gain, after downgrades hit the technology sector and disappointing jobs data kept buyers in check.

Stocks had surged to five-month highs in the prior session.

The Dow Jones Industrial Average (DJI) closed up 22.93 points, or 0.2%, to 10,967.65 after bouncing between small gains and losses for most of the session.

Nineteen of the Dow's 30 components closed higher, led by a 2.4% gain in shares of General Electric Co. (GE)

The Nasdaq Composite Index (RIXF) fell 19.17 points, or 0.8%, to 2,380.66.

Software stocks and those that service companies' data-storage needs dropped sharply after Equinix Inc. (EQIX) warned on its revenue outlook, prompting analysts at Oppenheimer, Citigroup and Wells Fargo to cut ratings on the provider of data-center hosting services.

Equinix shares fell 33%. On the S&P 500, the six worst decliners were tech stocks, led by a 14% drop in Citrix Systems Inc. (CTXS) shares, a 7.9% drop in Salesforce.com (CRM) and a 7.7% tumble in RedHat Inc. (RHT) shares.

The S&P 500 Index (SPX) closed down 0.8 point, or 0.1%, to 1,159.97, with telecommunications and technology the hardest hit among its 10 industry sectors.

"The ADP jobs survey came up short of expectations and reinforced the bull run on Treasurys, while undermining confidence on stocks, compounded by a downgrade in the semiconductor sector," said analysts at Action Economics.

Ahead of Wall Street's start, stock futures turned lower after payrolls processor ADP reported private employers trimmed 39,000 jobs in September, the first decline in seven months.

The decline, which ran counter to expectations for an increase, was offset in part by ADP's upward revision to its August count for private-sector payrolls.

Treasury prices gained as yields fell to their lowest level after the ADP report. Read more about weakness in 10-year and 2-year Treasury yields.

Morgan Stanley downgraded recommendations on Xilinx Inc. (XLNX) and Altera Corp. (ALTR) shares, saying a recent trip to Asia had led to expect decelerating chip orders from this market.

Among Dow stocks, GE announced a $3 billion deal to buy engine manufacturer Dresser Inc. and said it would purchase $1.6 billion in retail credit assets from Citigroup Inc. (C)

GE also said Britain's Wellstream Holdings PLC had spurned a $1.2 billion takeout offer.

Also supporting the Dow's rise, Alcoa Inc. (AA) rose 1.9% ahead of the aluminum maker reporting quarterly results on Thursday in the unofficial start of the earnings season.

For every four stocks on the rise roughly five were falling on the New York Stock Exchange, where 981 million shares traded hands.

The Japanese yen hit a 15-year high versus the dollar, with the greenback's weakness a factor (DXY) as crude-oil futures finished above $83 a barrel, and gold ended at a record high, nearing $1,350 an ounce.

While feeding bearish sentiment, the ADP report also bolstered the notion that the Federal Reserve might be moved to take additional steps to stoke the embattled U.S. recovery.

The Fed, which already has U.S. interest rates near zero, might announce further purchases of government bonds when it concludes a policy-setting meeting early next month.

The ADP report comes two days before the Labor Department's monthly payrolls report.

Shop talk

On Thursday, dozens of retailers report September sales figures, with upscale retailers Saks Inc. (SKS) and Nordstrom Inc. (JWN) among those analysts expect to report rises in same-store sales of as much as 5%.

Further out, the National Retail Federation expects retail sales in the upcoming holiday shopping season to climb 2.3% this year, with the increase tepid compared to the 10-year average of 2.5%, but far better than last year's 0.4% increase and the 3.9% decline tallied in 2008.

 
 

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