Stocks sag on signs of slowing economy
Fed’s new stimulus pledge no panacea
NEW YORK — Signs of a slowing economy dragged down the stock market Wednesday, and even a pledge of more stimulus from the Federal Reserve left investors cold.
The Dow Jones industrial average closed down 139 points, or 0.9 percent, to 14,701. The Standard & Poor’s 500 index, a broader market measure, dropped 15 points to 1,583, also a decline of 0.9 percent.
Stocks opened lower and kept sagging throughout the day, hurt by a pair of reports.
A survey by payroll processor ADP shows U.S. companies added just 119,000 jobs in April, the fewest in seven months. And hiring in March was slower than first thought, with job gains revised down to 131,000 from an initial estimate of 158,000.
Manufacturing expanded in April at the slowest pace this year and companies took on the fewest workers in seven months. The Institute for Supply Management’s factory index fell to 50.7 from the prior month’s 51.3, the Tempe, Ariz.-based group’s report showed today. Fifty is the dividing line between growth and contraction.
There was no help on the earnings front: The big-name companies that reported results most disappointed.
“Investors are going to be rattled by these numbers,” said Colleen Supran, a principal at San Francisco based-Bingham, Osborn & Scarborough. She expects stock market swings to increase.
The stock market remained in negative territory even after the Federal Reserve released at statement following a two-day policy meeting.
The central bank stood by its huge effort to stimulate the economy. The Fed is maintaining its $85-billion-a-month bond-buying program, which is intended to keep interest rates low to spur borrowing, spending and investing.
“It’s an acknowledgement that the soft patch can intensify,” said Quincy Krosby, a market strategist for Prudential Financial, referring to the slowing growth in the economy.
The Nasdaq composite index dropped 30 points, or 0.9 percent, to 3,299.