By Anora Mahmudova, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks opened lower on Wednesday,
unable to follow through on the previous day's modest gains, after
a weaker-than-expected ADP jobs report.
More economic signals will come later in the Institute for
Supply Management's non-manufacturing survey. Investors will also
pay attention to two Fed officials speaking later on Wednesday.
The S&P 500 (SPX) opened 8 points, or 0.5%, lower at
1,747.83. The Dow Jones Industrial Average (DJI) shed 58 points, or
0.4% to 15,389.05. The Nasdaq Composite (RIXF) dropped 26 points,
or 0.7% to 4,004.98 at the open.
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Private-sector-employment gains slowed down in January, with
employers adding 175,000 jobs, slightly less than expected, while
the December number was revised down to 227,000, according to the
Automatic Data Processing Inc. report released on Wednesday. The
report comes ahead of the official non-farm payrolls data due on
Friday.
Ian Shepherdson, chief economist at Pantheon Macroeconomics,
says the headline ADP number is depressed by technical factors and
likely understates the official private payroll number.
"We think it likely the official number for January will
overshoot ADP, and we are still looking for private payrolls to
rebound about 225K, recovering some of the lost Dec ground," he
wrote in a note.
At 10 a.m. Eastern Time, investors will gauge the health of the
non-manufacturing sector from ISM. Earlier in the week, markets got
a shock when the ISM manufacturing survey showed a sharp slowdown
among customers in January, triggering a big selloff for Wall
Street. Spotlight on economy: ADP jobs report in crosshairs
Investors will be paying attention to two Fed officials speaking
today for clues about changes in monetary policy. Philadelphia Fed
President Charles Plosser is due to speak on the economy at 12:30
p.m. Eastern Time in Rochester, New York, and Atlanta Fed President
Dennis Lockhart is scheduled to speak on the economic outlook at
1:40 p.m. Eastern Time in Birmingham, Alabama.
Shares of Ralph Lauren Corp. (RL) rallied initially, but gave up
gains after the retailer beat Wall Street expectations and raised
its previous full-year guidance for revenue.
Humana Inc. (HUM) shares slid after the health insurer said it
swung to a fourth-quarter loss, but stuck to its 2014 earnings
guidance.
CVS Caremark Corp. (CVS) shares fell after the drugstore chain
said Wednesday it would stop selling cigarettes and tobacco
products in stores by Oct. 1. CVS said the estimated $2 billion
drop in revenues would not affect 2014 per-share earnings.
Shares of C.H. Robinson Worldwide Inc. (CHRWD) fell sharply
after the company posted a 64% drop in fourth-quarter profit on
Tuesday, missing expectations.
Shares of Automatic Data Processing Inc. (ADP) fell even as the
company reported better-than expected profit and revenue in the
fiscal second quarter.
Merck & Co. Inc.(MRK) shares rose despite the company
announcing a drop in fourth-quarter profit and revenue.
Shares in Tableau Software Inc. (DATA) and Myriad Genetics Inc.
(MYGN) soared after upbeat quarterly results late Tuesday.
Twitter Inc. (TWTR) and Walt Disney Co. (DIS) will release
results after the market close.
In other markets, European stocks erased gains after the ADP
report. Stocks stabilized in Asia. Gold and oil prices moved
higher, while the dollar extended losses after a report on
private-sector employment showed a slower pace of growth than
expected.
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