Stocks showed a notable move back to the downside on Wednesday after trending higher over the past several sessions. A disappointing batch of U.S. economic data weighed on the markets, inspiring traders to cash in on the recent gains.
The major averages ended the day firmly in the red, with the S&P 500 pulling back off a record closing high. The Dow tumbled 138.85 points or 0.9 percent to 14,700.95, the Nasdaq fell 29.66 points or 0.9 percent to 3,299.13 and the S&P 500 slid 14.87 points or 0.9 percent to 1,582.70.
The weakness on Wall Street came as the latest batch of data provided further evidence of a Spring slowdown by the U.S. economy.
Sparking the negative sentiment, payroll processor ADP released a report before the start of trading showing that private sector employment increased by much less than expected in the month of April.
ADP said private sector employment increased by 119,000 jobs in April following a downwardly revised increase of 131,000 jobs in March. Economists had expected the addition of about 155,000 jobs.
Jennifer Lee, senior economist at BMO Capital, said, "The U.S. ADP national employment report missed expectations in April, and then some, which is, in turn, lowering expectations for the official jobs report due out Friday."
Adding to the worries about the economy, the Institute for Supply Management released a separate report showing a slowdown in the pace of growth in the manufacturing sector in April.
The ISM said its purchasing managers index fell to 50.7 in April from 51.3 in March, although a reading above 50 still indicates growth in the manufacturing sector.
While the reading above 50 points to the fifth consecutive month of growth in the manufacturing sector, the drop pulled the index down to its lowest level since December of 2012.
The Commerce Department also released a report showing an unexpected decrease in construction spending in the month of March.
Stocks saw continued weakness in afternoon trading following the Federal Reserve's announcement of its latest decision on monetary policy.
As was widely expected, the Fed left interest rates unchanged and maintained the $85 billion per month pace of is asset purchase program.
Traders seemed somewhat disappointed that the central bank did not offer much of an acknowledgment of the recent soft patch of data.
Rob Carnell, chief international economist at ING, said, "The main nod to the recent run of poor data is a reference to fiscal policy, which it notes '…is restraining economic growth.' But that is about the only substantive change on the economic backdrop."
"Of course, the statement continues to see downside risks to economic growth, but apparently, little more than at the previous meeting," he added.
Notably, the Fed included a sentence indicating that it is prepared to increase or reduce the pace of its asset purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.
Sector News
Most of the major sectors showed notable moves to the downside over the course of the trading day, reflecting the broad based weakness on Wall Street.
Transportation stocks saw considerable weakness on the session, dragging the Dow Jones Transportation Average down by 2.3 percent. Kansas City Southern (KSU) and JetBlue (JBLU) turned in two of the sector's worst performances.
Significant weakness was also visible among chemical stocks, as reflected by the 2.4 percent loss posted by the Dow Jones Chemicals Index. Eastman Chemical (EMN) and FMC Corp. (FMC) posted notable losses, helping to pull the index down off the one-month closing high set on Tuesday.
Brokerage, electronic storage, and gold stocks also moved notably lower on the day, with gold stocks under pressure along with the price of the precious metal.
Other Markets
Overseas, many of the major markets in both Europe and the Asia-Pacific region were closed for May Day holidays. While Japan's Nikkei 225 Index ended the day down by 0.4 percent, the U.K.'s FTSE 100 Index rose by 0.3 percent.
In the bond market, treasuries moved notably higher on the heels of the disappointing economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.6 basis points to a new four-month closing low of 1.639 percent.
Looking Ahead
Following today's statement from the Fed, the European Central Bank's monetary policy announcement is likely to take center stage on Thursday. A number of analysts expect the ECB to cut interest rates.
On the U.S. economic front, traders are likely to keep an eye on reports on weekly jobless claims, labor productivity, and the trade balance.
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Business News
May 08, 2026 15:50 ET Manufacturing and services sector survey results and labor market data from main economies were the highlight on the economics news front this week. Factory orders and jobs report dominated the news flow in the U.S. Similarly, industrial production data from German garnered attention in Europe. In Asia, purchasing managers’ survey results from China and the central bank decision from Australia were in focus.