Stocks Slide Despite Improvement in Non-Manufacturing Activity
NEW YORK (TheStreet) -- Stocks slipped on Wednesday for a second straight session, falling further from record highs set on Monday. Non-manufacturing and services sector activity rose in February, partially offsetting disappointing data from ADP that showed a less-than-expected increase in private payrolls.
The S&P 500 fell 0.73%, the Dow Jones Industrial Average fell 0.76%, and the Nasdaq declined 0.62%.
The ISM Non-Manufacturing Index improved to 56.9 in February from 56.7 a month earlier, an unexpected increase as economists expected a slide to 56.5. Business activity slipped slightly, down to 59.4 from 61.5.
Service sector activity expanded in February with the U.S. PMI Services Index climbing to a four-month high of 57.1 from 54.2 in January. Economists had expected a reading of 54.8.ADP said 212,000 jobs were added to private payrolls in February, a touch lower than in January. The reading was less than an expected 220,000 increase. "Job growth is strong, but slowing from the torrid pace of recent months," said Mark Zandi, chief economist of Moody's Analytics. "Job gains remain broad-based, although the collapse in oil prices has begun to weigh on energy-related employment. At the current pace of growth, the economy will return to full employment by mid-2016." The Bureau of Labor Statistics will release the U.S. jobs report for February on Friday. Expectations are for 235,000 jobs to have been added to nonfarm payrolls compared to 257,000 a month earlier. The unemployment rate is forecast to tick down 100 basis points to 5.6%. Crude oil was slightly higher, reclaiming a level above $50 a barrel, after the American Petroleum Group indicated U.S. crude supplies rose at a slower-than-expected pace over the week ended Feb. 27. The latest data showed an increase of 2.9 million barrels over the week, lower than a forecast increase of 4 million barrels. West Texas Intermediate crude oil climbed 0.8% to $50.94 a barrel. Abercrombie & Fitch (ANF) slumped more than 9% after quarterly sales tumbled nearly 14% and comparable-store sales fell 10%. Fellow teen retailer American Eagle Outfitters (AEO) jumped 7.2% after fourth-quarter earnings of 36 cents a share beat estimates by 2 cents and revenue climbed 3%. Bob Evans Farms (BOBE) tanked 21% after reporting earnings below estimates and announcing it won't pursue a sale or spinoff of its BEF Foods segment. TiVo (TIVO) jumped 3% after beating quarterly earnings and revenue forecasts on an increase in customer subscriptions. Target (TGT - Get Report) was slightly higher after announcing plans to cut thousands of jobs in a restructuring designed to reduce costs by $2 billion over two years. At its analyst day presentation, the retailer also guided for 2015 earnings as high as $4.65 a share, above analysts' estimates of $4.50 a share. Firearms manufacturer Smith & Wesson (SWHC - Get Report) jumped nearly 12% after beating analysts' estimates on its top- and bottom-lines. The company also raised its full-year earnings forecast as high as 89 cents a share from a previous 78 cents. China's services sector grew slightly in February. The HSBC/Markit purchasing managers' index ticked up to 52 over the month from 51.8 in January. China's Shanghai Composite added 0.51%. "The solid rise in new orders suggests that activity growth may pick up in the months ahead," said Markit's Annabel Fiddes in a statement. European markets fell back from earlier gains following the best increase in retail sales in nearly 10 years. Retail sales in the eurozone increased 3.7% in January. Markit's purchasing managers' index for the eurozone rose to 53.7 in February, higher than 52.7 in January, though lower than a preliminary reading of 53.5.
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