Wall Street Deflates 3% on Jobs Data, Profit Warnings

Updated from 4:13 p.m. EST

Stocks in New York took a sharp blow Wednesday, as earnings warnings, job cuts and another ethics scandal rattled investor confidence on Wall Street. Equities didn't suffer alone, however, as oil, gold and Treasury prices also were sent reeling.

The Dow Jones Industrial Average tumbled 245.4 points, or 2.7%, to 8769.7, and the S&P 500 fell 28.05 points, or 3%, to 906.65. The Nasdaq sank 53.32 points, or 3.2%, to 1599.06.

Tech stocks, which had led the gainers on Tuesday's advance, were at the forefront, alongside financials, of Wednesday's retraction. Microsoft (MSFT) and Intel (INTC) fell 6% apiece to $19.51 and $14.44, respectively.

But leading the decliners on the Dow, Alcoa (AA) fell 10% to $10.89 on news it plans to slash more than 15,000 full-time and contractor positions and further cut output to better handle the economic downturn. Those layoffs will go atop a heap of headcount reductions symptomatic of the ailing economy.

A report issued by ADP Employment Service on Wednesday forecast that private-sector employment fell by 693,000 in December, suggesting the nonfarm payroll numbers, to be released Friday, will have declined much more severely than expected.

ADP has significantly underestimated the monthly job losses in recent months, in comparison to data from the Bureau of Labor Statistics, but ADP said it has made methodological improvements to its calculations.

Inheriting the economic storm, President-elect Barack Obama delivered his first press conference of the new year, nominating Nancy Killefer to a new position, chief performance officer. Killefer, a director of a management consulting firm and former assistant secretary of the Treasury under President Clinton, will be responsible for setting performance standards, maintaining accountability and streamlining processes to ensure efficient use of taxpayer dollars.