Worse-than-expected Economic Data Thwart Rally

Some of the biggest declines were in energy, industrial and material stocks — all areas that have benefited in recent days from gains in oil and commodity prices.

Oil prices pulled back sharply on Wednesday after a weeklong rally as the government reported a big jump in crude storage levels, signaling continued weak demand.

As oil prices shed $2.43 to finish at $66.12 a barrel, Valero Energy Corp. sank $3.98, or 17.8 percent, to $18.40, and Sunoco Inc. dropped $2.27, or 7.5 percent, to $28.03.

Investors in both stocks and energy were displeased with a Commerce Department report showing a smaller-than-expected rise in factory orders. Though it was the second gain in the past three months, orders rose just 0.7 percent in April when analysts had called for a 0.9 percent increase.

Also, a trade group reported that the services sector shrank in May at the slowest pace since October. The barometer was below economists' estimates and marked the eighth straight monthly decline.

The rally's staying power will face further tests this week as retailers report May sales results Thursday and as the Labor Department releases its monthly jobs report on Friday. The unemployment report is one of the most closely watched indicators of the economy's health.