Stocks declined Wednesday as readings on employment and manufacturing came in weaker than expected.
ADP Employer Services said private employers cut 298,000 jobsin August, fewer than the downwardly-revised 360,000 jobs lost in July, but considerably worse than expectations of 250,000.
And planned layoffs fell 21 percent to 76,456 last month from July, according to a report from outplacement consultant Challenger, Gray & Christmas.
These reports are closely watched for insight on the employment picture ahead of the Labor Department's August jobs report, due out Friday. Economists expect to see that 233,000 jobs were lost, slightly fewer than the 247,000 lost in July, and that the unemployment rate ticked up to 9.5 percent.
"[W]e reckon Friday's official number will be about 250K. That's still terrible, but it does mean that the trend towards smaller net job losses continues," Ian Shepherdson, chief U.S. economist at High Frequency Economics, wrote in a note to clients. "The move to payroll stability ... is some way off yet, though."
In the morning's other economic news, factory orders rose 1.3 percentin July, the fourth straight increase but smaller than the 2.2 percent expected. Nonfarm productivity rose at a 6.6 percent annual rate in August and mortgage applications fell by a seasonally adjusted 2.2 percent last week as demand for both purchase and refinance loans slipped.
This came after stocks tumbled 2 percentTuesday, their third straight decline and longest losing streak since June. The bulk of the losses came from the financial sector as investors got the jitters from whispers that another major bank failure was in the works.
Investors will be watching financials closely again today, including Bank of America , Citigroup , Wells Fargo , AIG and CIT Group .
Fannie Mae and Freddie Mac both tumbled more than 15 percent.
Oil prices, a fairly reliable tracking device for the stock market since the rally off the March lows, remained below $68 a barrel after a report showed crude supplies declined by 400,000 barrels last week.
Oil company BP could be a stock to watch, as the company announces what it terms a "giant" oil discovery in the Gulf of Mexico. ConocoPhillips is also a partner in that project.
Still to come, at 11:30am, Atlanta Federal Reserve Bank President Dennis Lockhart will give a speech at Emory University on the crisis and how the Fed has dealt with it.
This afternoon, the Fed will release the minutes of its last meeting. Investors will be watching closely to see if there are any hints about an exit strategy from the government's massive stimulus program.
Boeing shares slipped as the aerospace giant and rival Airbus will find out this week which one won what may just be the biggest commercial trade dispute in modern history.
- Peter Schacknow contributed to this report.
Still to Come:
WEDNESDAY: Factory orders; weekly crude inventories; Fed minutes
THURSDAY: Chain-store sales; weekly jobless claims; ISM services index
FRIDAY: August jobs report
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