NEW YORK (AP) — A series of weak economic reports pushed the stock market sharply lower Wednesday.
Companies like miners, banks and chemical makers, whose fortunes are most closely tied to the prospects for growth, fell the most. That's a sign investors are becoming less confident in the U.S. economy.
The troubling data released Wednesday included a slowdown in hiring at private companies last month, orders to U.S. factories that were weaker than expected and sluggish job growth in the service sector.
Investors have become increasingly sensitive to economic reports in the last two weeks. They are trying to anticipate when the Federal Reserve will pull back on its $85 billion of bond purchases a month. That program has supported markets this year, and on some days stocks have even rallied on speculation that an ailing economy would ensure the stimulus will remain in place.
"We're pleased to see the market sell off on some bad news," said John Lynch, a regional chief investment officer for Wells Fargo private bank. "The whole idea that bad news was good news was frustrating because it suggests to me that the markets are becoming too Fed-dependent."
Not all the news was bad. U.S. service companies grew at a faster pace in May, driven by a jump in new orders. However, fewer jobs were added in the sector.
The Institute for Supply Management's index of growth in the service sector rose to 53.7 from 53.1 in April. However a measure of employment fell to 50.1, the lowest since last July. That's a troubling sign because service companies, a broad category that includes entertainment, transportation and health care, have been the main source of jobs gains in the past several months.
The report was released shortly after payroll provider ADP said that U.S. businesses added just 135,000 jobs in May, the second straight month of weak gains. The increases are much lower than those reported over the winter, which averaged more than 200,000 a month from November through February.
Stocks edged lower in early trading and then fell steadily during the morning.
The Standard & Poor's 500 index fell 18 points, or 1.1 percent, to 1,613 as of 12:15 p.m. Eastern Daylight Time. The index has is about 3 percent below its closing high of the year. It closed at 1,669 m May 21.
The losses were broad. All 10 industry groups in the index declined. The sell-off was led by companies that make basic materials, industrial companies and banks.
The Dow Jones industrial average dropped 165 points, or 1 percent, to 15,012.
In commodities trading, the price of crude oil rose 40 cents, or 0.4 percent, to $93.72 a barrel. Gold rose $5, or 0.4 percent, to $1,402. The dollar fell against the euro and the Japanese yen.
As traders sold stocks, they bought low-risk U.S. government bonds. The yield on the benchmark 10-year Treasury note fell to 2.10 percent from 2.15 percent. The decline suggests investors are becoming less optimistic for the outlook for the economy.
In other trading, the Nasdaq composite dropped 35 points, or 1 percent, to 3,409.
Overseas markets also fell.
Japan's benchmark Nikkei 225 index had another day to forget. Investors were disappointed at the lack of detail in a keynote speech on the economy from Japanese Prime Minister Shinzo Abe. The Nikkei lost 3.8 percent to 13,014. It's now down 20 percent from its peak in mid-May. The Nikkei had soared at the start of the year thanks to aggressive stimulus measures from the Bank of Japan.
European stock markets also fell. Indexes fell 1.9 percent in France, 1.2 percent in Germany and 2.1 percent in Britain.
Among notable stock moves in U.S. markets:
—Walgreen rose 87 cents, or 1.8 percent, to $48.90 after the company reported revenue from established stores beat analysts' expectations for May, even though a rise in generic drugs continues to hurt revenue at the nation's largest drugstore chain.
—Apple fell $4.01, or 0.9 percent, to $445 after a U.S. trade agency issued a ban on imports of Apple's iPhone 4 and a variant of the iPad 2 after finding the devices violate a patent held by South Korean rival Samsung Electronics.
— Hovnanian rose 16 cents, or 2.8 percent, to $6.14 after the home builder reported a surprise profit for its fiscal second quarter, helped by higher demand from new homes.