Stocks slip on economic woes

NEW YORK (CNNMoney.com) -- A pair of weaker-than-expected economic reports sent stocks sliding Wednesday afternoon, giving investors a reason to retreat after the recent advance.

The Dow Jones industrial average (down 37.70 to 12,044.23, Charts) lost 0.4 percent with around 1-1/2 hours left in the session. The blue-chip barometer has closed at record highs in 13 of the previous 21 sessions.

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The broader S&P 500 (down 4.51 to 1,373.43, Charts) index also lost 0.5 percent. The tech-fueled Nasdaq composite (down 13.38 to 2,353.33, Charts) lost nearly 0.8 percent. Both indexes hit more than 5-1/2 year highs last week.

Stocks rose at the open Wednesday, as investors welcomed falling oil prices and some merger news. But the market lost steam following the release of the morning economic reports.

The ISM manufacturing report showed a surprise dip in October.

Released at around the same time, another report showed that construction spending fell 0.3 percent in September, a bigger dip than what economists were expecting.

An earlier report from ADP Employer Services showed that employers added around 128,000 jobs to their payrolls in October, providing an optimistic sign for Friday's widely-watched government employment release.

But after several days of weak economic news, investors opted to focus on the negative, particularly given the market's recent run, said Timothy Ghriskey, chief investment officer at Solaris Asset Management.

"We've seen a number of reports showing a weaker economy and I think that's why we've seen the market selloff over the last few days, despite strong earnings, lower oil prices and some merger news today," Ghriskey said.

However, he said that any pullback would be healthy in light of the market's recent run, and stocks should be able to recharge going forward.

In corporate news, Time Warner (down $0.06 to $19.95, Charts) reported quarterly sales and earnings that rose from a year ago, but were shy of forecasts. The parent of CNNMoney.com also reaffirmed its profit outlook for the full year. Shares were barely lower in the afternoon after falling 2 percent in the morning.

Shares of MasterCard (up $11.50 to $85.60, Charts), the credit card association, rallied 15 percent in active NYSE trading after reporting quarterly earnings and sales that surged from a year earlier and beat estimates.

Garmin (down $8.33 to $45.08, Charts), a maker of navigational devices, slumped over 14 percent in active Nasdaq trading after reporting quarterly revenue that rose from a year ago, but missed analysts' expectations. The company also reported higher quarterly earnings that met estimates.

In possible merger news, drugstore CVS and Caremark, a pharmacy benefits manager, said that they were in talks to form a so-called merger of equals. Shares of CVS (down $2.18 to $29.20, Charts) slumped nearly 8 percent, while Caremark (down $0.46 to $48.77, Charts) rose 3 percent.

In the printing services industry, R.R. Donnelley & Sons (up $0.33 to $34.19, Charts) said it will buy rival Banta (up $8.02 to $52.30, Charts) for $1.3 billion in cash.

Automakers were reporting October sales throughout the day, including Ford Motor (up $0.21 to $8.49, Charts), which reported improved results.

A number of tech stocks declined, led by the chip sector. Advanced Micro Devices (down $0.44 to $20.83, Charts) and Altera (down $0.46 to $17.98, Charts) were among the losers.

Market breadth was negative. On the New York Stock Exchange, losers edged winners nine to seven on volume of 1.07 billion shares. On the Nasdaq, decliners beat advancers three to two on volume of 1.20 billion shares.

Stocks were mixed Tuesday after disappointing reads on consumer confidence and manufacturing in the Midwest sparked worries about the economy. But the declines were modest at the end of an otherwise strong month - and an unusually strong October - on Wall Street.

U.S. light crude oil for December delivery rose 12 cents to $58.85 a barrel on the New York Mercantile Exchange, after falling in the morning. The price of oil was volatile after the release of a mixed weekly oil inventories report.

Treasury prices rose, lowering the yield on the 10-year note to 4.55 percent from around 4.61 percent late Tuesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar edged higher versus the euro and the yen.

COMEX gold for December delivery added $12.30 to $610.90 an ounce.

Beware choppy waters ahead

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