Stocks retreat in early going
Major gauges pull back as investors eye weak ADP employment report, drop in pending home sales, more bank woes.
NEW YORK (CNNMoney.com) -- Stocks slumped Wednesday, retreating after the recent rally, as investors eyed a weak reading on private sector employment, a big drop in pending home sales and ongoing problems in the financial sector.
The Dow Jones industrial average (down 84.70 to 13,364.16, Charts) lost 155 points, or 1.2 percent in the early going and the broader S&P 500 (down 13.57 to 1,475.85, Charts) index fell 1.2 percent. The Nasdaq Composite (down 14.68 to 2,615.56, Charts) lost 0.8 percent.
Stocks rose Tuesday as investors welcomed upbeat economic news and continued to bet that the Federal Reserve will cut interest rates if necessary when it meets later this month.
However, Wednesday's early trading was a lot more negative, as investors eyed the ADP employment report, which showed surprisingly weak growth in private sector employment in August. The report could be a negative indication for the broader August employment report, expected Friday morning.
A weak July pending home sales report, released shortly after the start of trade, added to the early negative tone.
In a busy day for economic news, the Fed's periodic 'beige book' look at the economy is due this afternoon.
Financial stocks slipped on continued worries about the sector's vulnerability amid tightening credit and ongoing problems in the mortgage market.
Citigroup (down $0.79 to $46.42, Charts, Fortune 500) and other large banks could be the latest in the sector at risk to billions in losses due to exposure to asset-backed commercial paper conduits - the kind of assets that have hurt many smaller rivals, the Wall Street Journal reported.
Treasury prices rose in a classic 'flight-to-quality' move, lowering the yield on the 10-year note to 4.49 percent from 4.54 percent late Tuesday. Bond prices and yields move in opposite directions.
In currency trading, the dollar rose versus the euro and eased against the yen.
U.S. light crude oil for October delivery fell 15 cents to $74.93 a barrel on the New York Mercantile Exchange.
COMEX gold for December delivery fell $3 to $688.50 an ounce.