Stocks snapped a two-day winning streak Wednesday after tepid reports on employment and the services sector.
The Dow Jones Industrial Average shed over 26.30, or 0.3 percent, to close at 10,270.55. The S&P 500 shed 0.6 percent, while the Nasdaq added less than tenth of a percent.
This came after a two-day rallythat sent stocks up more than 2 percent as investors were encouraged by earnings and economic news.
Today's economic news was less encouraging.
The ISM said its nonmanufacturing index, which measures the strength of the services sector, rose to 50.5 in January from 49.8 in December. The move over 50 signals growth and is encouraging but economists were expecting a little more after such robust data recently.
"While signaling economic conditions that are vastly improved from late 2008/early 2009, this index contrasts with considerably perkier manufacturing indicators," Joshua Shapiro, chief economists at MFR, wrote in a note to clients. "Obviously the non-manufacturing indicator represents a much larger chunk of the economy than the manufacturing index, and its recent performance underscores the difficult conditions still facing the overwhelming majority of U.S. businesses."
The jobs news was also pretty tepid: ADP reported that 22,000 jobs were lost from private payrolls in January, and Challenger, Gray & Christmas said US employers announced last month plans to lay off more than 71,000 workers, the first time since last July that planned job cuts rose.
Both reports are being closely watched by Wall Street ahead of Friday's jobs report from the government. Economists are currently expecting to see that 5,000 jobs were added to nonfarm payrolls in January after a loss of 85,000 in December.
Mortgage applications jumped 21 percentlast week, but that was largely due to a wave of refinancing.
And oil settled below $77 a barrelafter a report showed crude inventories jumped by 2.3 million barrels last week, much more than expected.
Pfizer, Merck and Home Depot were the biggest drags on the Dow.
Disney and McDonald's were among the few Dow gainers.
Pfizer, one of the prior session's best performers, was the biggest Dow decliner today after the drug maker's earnings and outlook fell short of expectations.
McDonald's got a boost from Goldman Sachs, which added the fast-food stock to its "conviction buy" list.
More bad news for Toyota: Now it seems the 2010 Prius may have brake problems. It says dealers have received several dozen complaints, including, apparently, Apple co-founder Steve Wozniak.
And the hits just kept on coming: US Transportation Secretary Ray LaHood said, "If you own one, I say stop driving. Return it now," during a congressional hearing. He later revised that advice in a press conference, suggesting Toyota drivers take their cars to a Toyota dealership immediately but refrained from saying "Stop driving."
Toyota's US-traded shares lost more than 6 percent today.
Rival Ford continued to ride the wave of investor enthusiasm after reporting its sales rose 35 percent in January.
There was a lot of buzz about bonuses today. Amid public outrage over AIG bonuses, the insurance giant said 97 percent of its employees agreed to voluntarily reduce their "retention" bonuses.
And Bank of America has approved more than $4 billion in bonus pay for 2009 for its investment bankers and traders, according to the Wall Street Journal.
A renewed pledge by President Obama to get health-care and banking reform passed weighed on those sectors.
Earnings from the media sector have been better than expected but stocks in the sector were mixed today.
Comcast, the prospective new owner of CNBC parent NBC Universal, reported earnings of 33 cents a share that beat Wall Street expectations.
And Time Warner also beat expectations on the strength of big movie releases in the past quarter.
Both Comcast and Time Warner shares fell.
But News Corp. jumped more than 6 percent as the media giant beat Wall Street estimates after the bell Tuesday.
Cisco Systems and Yum Brands are the most prominent companies reporting earnings after today's closing bell.
Still to Come:
WEDNESDAY: Earnings from Cisco, Visa and Yum Brands after the bell
THURSDAY: Senate hearing on NBC-Comcast; Tea Party Convention; chain-store sales; ECB, BOE announcements; weekly jobless claims; factory orders; Earnings from GlaxoSmithKline, Vodafone, Kellogg, MasterCard, Northrop Grumman, Sony, Unilever and Burger King
FRIDAY: Earnings from Aetna and Tyson Foods
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