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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