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US STOCKS-Data not strong enough to stop the selling on Wall Street
February 5, 2014 / 4:15 PM / 4 years ago

US STOCKS-Data not strong enough to stop the selling on Wall Street

* ADP report a tick below expectations, Dec. revised lower

* Services sector grows at faster clip than forecast

* Gilead Sciences shares weigh the most on S&P 500

* Indexes down: Dow 0.3 pct, S&P 0.6 pct, Nasdaq 1.2 pct

By Rodrigo Campos

NEW YORK, Feb 5 (Reuters) - U.S. stocks fell on Wednesday after mixed data gave investors few reasons to return to the market in what could be the middle of a long-awaited correction.

U.S. data is being closely watched after a weak reading in the factory sector on Monday sent Wall Street into a tailspin and triggered a global equity selloff.

At its session low, the S&P 500 was 6 percent below its Jan. 15 record high, and technicians are looking at the 1,730/1,740 area - the mid September high and Monday’s low - for support.

“We are now at critical support at 1,740 so they are going to try to defend that,” said Paul Mendelsohn, chief investment strategist at Windham Financial Services in Charlotte, Vermont.

“It will be a buying opportunity when investors feel comfortable this rout we’re in is over,” he said.

“I don’t think they want to step in front of it just yet until they have a feeling of where the bottom is going to be. We’re not there yet.”

The Dow Jones industrial average fell 44.44 points or 0.29 percent, to 15,400.8, the S&P 500 lost 11.02 points or 0.63 percent, to 1,744.18 and the Nasdaq Composite dropped 46.696 points or 1.16 percent, to 3,984.824.

Investors are not ready to call the bottom and are paying more for protection against further slides. The CBOE Volatility Index rose 5.5 percent to trade above 20 for a third-straight session.

The vast U.S. services sector rebounded in January after two months of slower growth and firms added workers at the fastest clip in more than three years, according to the Institute for Supply Management. Separate data showed the U.S. private sector created 175,000 jobs in January, slightly below estimates, while the December reading was revised lower.

The limp data earlier in the week added to concerns about growth in China and the outlook for some emerging market economies. A recent rout in emerging currencies spurred some central banks to act, pressuring bond and stock holdings and luring investors into assets perceived as relatively safe, like the yen and U.S. and German government debt.

“There’s fear as we move into Friday’s (jobs) report that we’re going to see a weather impact that is going to distort the number and make if difficult to know if it is covering up something more substantial,” said Mendelsohn.


According to Thomson Reuters data through Wednesday morning, of the 298 companies in the S&P 500 that have reported earnings, 69.5 percent have topped Wall Street expectations, above the 63 percent beat rate since 1994 and the 67 percent rate for the past four quarters.

Gilead Sciences fell 5.4 percent to $77.60 and was the heaviest weight on the S&P 500 a day after quarterly results.

Shares of Cognizant Technology Solutions fell 6.9 percent to $90.36. The IT services provider forecast slower-than-expected revenue growth.

Merck shares rose 1.7 percent to $54.43 on enthusiasm for newly announced cancer-drug partnerships with rival U.S. companies, even as the Dow component’s sales and profit just missed analysts’ estimates.

Tableau Software shares jumped 15.9 percent to $92.02 after the data analysis software maker forecast better-than-expected revenue for this quarter and results handily beat analysts’ estimates.

CVS Caremark Corp said it would stop selling tobacco products at its 7,600 stores by October, becoming the first U.S. drugstore chain to take cigarettes off the shelf. Its shares fell 1.6 percent to $65.06.

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