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U.S. Stocks Fall Sharply Amid Renewed Economic Worries

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Stocks moved sharply lower over the course of the trading day on Wednesday, extending the significant pullback seen in the previous session. With the continued weakness on the day, the major averages fell to their lowest closing levels in over a month.

The major averages climbed off their lows of the session but still closed firmly in negative territory. The Dow plummeted 494.42 points or 1.9 percent to 26,078.62, the Nasdaq slumped 123.44 points or 1.6 percent to 7,785.25 and the S&P 500 tumbled 52.64 points or 1.8 percent to 2,887.61.

The sell-off on Wall Street came as disappointing jobs data from payroll processor ADP added to the economic concerns raised by yesterday's weak manufacturing data.

ADP said private sector employment climbed by 135,000 jobs in September compared to economist estimates for an increase of about 140,000 jobs.

The report also showed a significant downward revision to the increase in private sector jobs in August, which was slashed to 157,000 jobs from the originally reported 195,000 jobs.

"Businesses have turned more cautious in their hiring," said Mark Zandi, chief economist of Moody's Analytics. "If businesses pull back any further, unemployment will begin to rise."

Ahu Yildirmaz, vice president and co-head of the ADP Research Institute, noted the average monthly job growth for the past three months has fallen to 145,000 from 214,000 in the same time period last year.

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

Employment is expected to increase by 140,000 jobs in September after rising by 130,000 jobs in August, while the unemployment rate is expected to hold at 3.7 percent.

Sector News

Steel stocks showed a substantial move to the downside on the day in an indication of concerns about the outlook for global demand.

Reflecting the weakness in the sector, the NYSE Arca Steel Index plunged by 3 percent to its lowest closing level in a month.

Significant weakness also emerged among oil stocks, which moved lower along with the price of crude oil. With crude for November delivery tumbling $0.98 to $52.64 a barrel, the NYSE Arca Oil Index slumped by 2.6 percent.

Brokerage stocks also extended yesterday's sell-off after TD Ameritrade (AMTD) said it will eliminate commissions for its online exchange-listed stock, ETF and option trades following a similar move by Charles Schwab (SCHW).

Transportation, banking and telecom stocks also saw considerable weakness on the day amid broad based selling pressure on Wall Street.

Meanwhile, gold stocks were among the few groups to buck the downtrend, benefiting from a sharp increase by the price of the precious metal.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index fell by 0.5 percent, while Hong Kong's Hang Seng Index dipped by 0.2 percent.

The major European markets showed more substantial moves to the downside on the day. While the German DAX Index plunged by 2.8 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index plummeted by 3.1 percent and 3.2 percent, respectively.

In the bond market, treasuries extended the upward move seen over the course of the previous session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.8 basis points to 1.596 percent.

Looking Ahead

Reports on weekly jobless claims, service sector activity, and factory orders may attract attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the release of the monthly jobs report on Friday.

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