By Saumya Vaishampayan
Stocks fell on Wednesday after weak economic data added to
concerns about U.S. growth at the start of the year.
The Dow declined 122 points, or 0.7%, to 17653. The S&P 500
shed 12 points, or 0.6%, to 2056, and the Nasdaq Composite lost 39
points, or 0.8%, to 4861.
Treasury prices rose, pushing the 10-year yield down to 1.861%
from 1.930% on Tuesday.
Health-care stocks in the S&P 500 fell the most, down 1.9%.
Energy stocks rose along with the price of oil, up 0.5%. Crude-oil
futures added 3% to $49 a barrel.
Soft economic reports added to the negative tone, dimming the
outlook for corporate profits. Private payrolls rose by 189,000 in
March, according to data compiled by payroll processor Automatic
Data Processing Inc. and forecasting firm Moody's Analytics.
Economists surveyed by The Wall Street Journal had expected an
increase of 225,000 jobs.
Separately, data showed manufacturing activity slowed for the
fifth month in a row. The Institute for Supply Management's
manufacturing purchasing managers index fell to 51.5 in March from
52.9 in February, coming in lower than expectations of 52.5. The
ISM's employment index also dropped, further evidence of a slowdown
in the labor market last month.
Wednesday's declines "really have to do with the soft data,"
said Dan Suzuki, senior U.S. equity strategist at Bank of America
Merrill Lynch. "Given that everybody is focused on what the Friday
payrolls number is going to be, those two data points are pretty
negative" for the jobs outlook, he added, referring to the ADP and
ISM employment numbers.
The Labor Department on Friday will release its monthly payrolls
report. Economists surveyed by The Wall Street Journal expect
employers added 248,000 jobs in March. The stock market will be
closed for the Good Friday holiday.
Stocks fell Tuesday, pulling the Dow into negative territory for
the first quarter. The S&P 500 eked out a quarterly gain of
0.4% and the Nasdaq gained 3.5% in the period, with both indexes
notching their ninth quarter in a row of gains. Still, the
S&P's first-quarter advance was the smallest in those nine
quarters of gains amid soft U.S. economic performance at the start
of the year and concerns about first-quarter earnings.
"Overall, the U.S. is in decent shape," said Laura LaRosa,
director of portfolio management at Glenmede. "We will probably
have positive returns this year, just not what we've seen in the
last couple of years, " she added.
Many investors are bracing for sharper swings in the stock
market this year, driven by uncertainty about economic growth,
global monetary policy and how moves in currencies and commodities
will impact earnings. "All of that is going to lead to higher stock
market volatility," said Mr. Suzuki of Bank of America.
European stocks were bolstered by better-than-expected data that
showed eurozone manufacturing activity in March grew at the fastest
pace in 10 months. Germany's DAX gained 0.3% and France's CAC 40
rose 0.6%.
"The valuations in Europe are much more attractive right now,"
said Ms. LaRosa of Glenmede, adding that European stocks will
likely outpace their U.S. counterparts this year.
In other markets, gold futures rose 1.5% to $1201.30 an ounce.
The dollar took a breather, with the euro rising to $1.0777 from
$1.0735 on Tuesday.
In corporate news, Macerich Co. rejected Simon Property Group
Inc.'s "best and final" bid , saying the offer undervalued the
company. Simon subsequently withdrew its $16.8 billion offer.
Macerich shares fell 4.4% while Simon shares added 0.4%.
GoDaddy Inc. shares rose 33% above their initial public offering
price in their market debut Wednesday. GoDaddy priced its IPO above
expectations on Tuesday, at $20 a share.
Write to Saumya Vaishampayan at saumya.vaishampayan@wsj.com
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