Stocks Finish Lower on Weak Earnings, Economic Data

NEW YORK (TheStreet) -- Stocks finished with a whimper Wednesday on disappointing economic data, weak earnings reports and a slide in commodity prices.

The Dow Jones Industrial Average fell 85 points, or 0.7%, to settle at 12,723. The S&P 500 tumbled 9 points, or 0.7%, to 1347 and the Nasdaq Composite off by 13 points, or 0.5%, at 2828.

A poor read on the employment picture stoked the selling pressure on equities. Companies added 179,000 jobs in April, according to Automatic Data Processing's employment change report. The level was lower than the growth of 200,000 that economists had been expecting, and also below March's upwardly revised level of 207,000 jobs.

In addition, activity within the services sector weakened in April as the Institute for Supply Management's non-manufacturing index fell to a reading of 52.8, from March's level of 57.3. Economists had been expecting a stronger reading of 57.4 for April, according to Briefing.com.

"Market participants probably don't like those ADP numbers and today's M&A news didn't offset the ADP data as much as a bullish investor might have hoped," said Mike McGervey, president of McGervey Wealth Management.

Earlier, ConAgra Foods(CAG) offered to buy Ralcorp Holdings(RAH) for $86 a share, or $4.9 billion in cash, which exceeds the $82 a share cash-and-stock proposal that ConAgra made for the branded food products company in March. Ralcorp's stock gained 4.9% to close at $87.39, while ConAgra's stock rose 3.1% to $25.51.

Applied Materials(AMAT) agreed to buy Varian Semiconductor(VSEA) for $63 a share in cash, or $4.9 billion. The per-share price represents a 55% premium to Varian's closing price on Tuesday. Shares of Varian soared 51.3% to $61.36, while shares of Applied Materials fell 1% to $15.09.

The ADP report, which measures job growth in the private sector, is widely considered an early indicator of the government's monthly non-farm payroll report. On Friday, the market expects the U.S. Labor Department to report job growth of 185,000 in April, which is down from March's increase of 216,000.