Stocks retreat after rally
Wall Street backs off after the previous session's rally after a pair of weak economic reports.
NEW YORK†(CNNMoney.com) -- Stocks slumped Wednesday morning as weak readings on the economy gave investors a reason to retreat after the previous session's run up.
"For the moment, it looks like were headed for a give-back of yesterday's gains," said Peter Cardillo, analyst for Avalon Partners.
Wall Street rallied Tuesday as investors cheered signs that automakers may get a bailout. The Dow soared 3.3%, the S&P 500 added 4% and the Nasdaq composite climbed 3.7%.
Global stock indexes were mixed. In Asia, major markets finished in positive territory, with the Hang Seng and the Nikkei both rising more than 1%. But European markets were lower in morning trading, with the FTSE in London down 3%, the DAX in Frankfurt down 2.6% and the CAC in Paris off 2.2%.
Economy: Before the market open, two separate reports showed heavy job losses in November.
Non-farm private employment fell by 250,000 jobs in November from the previous month on a seasonally adjusted basis, according to payroll-processor ADP's National Employment Report. The report was expected to show a decline of 200,000 jobs in November, according to a consensus of economist projections compiled by Briefing.com.
The outplacement firm Challenger, Gray & Christmas announced that job cuts by U.S. employers soared to 181,671 in November. This is up 61% compared to October's 112,884 cuts, and it is the highest level since 2002.
Also, the Labor Department reported productivity increased by a revised 1.3% in the third quarter, up from the initial reading of 1.1%. This trumped the revised 0.9% increase that was projected economists polled by Briefing.com. In the second quarter, productivity rose by 3.6%.
After the market opens, reports from the Institute of Supply Management, a national survey of purchasing managers, and the Fed's Beige Book are due.
At 10 a.m. ET, the ISM services index is expected to show an index of 42 for November, according to the Briefing.com consensus. This would be down from 44 in the prior month, showing further contraction in the sector.
Companies: BlackBerry maker Research in Motion (RIMM) late Tuesday lowered its third-quarter sales and earnings outlook. The Canadian company said it was cutting its view because of the weak U.S. economy and strengthening dollar.
French energy giant EDF made a $4.5 billion offer for assets of wholesale power generator Constellation Energy (CEG, Fortune 500). EDF's bid comes after Constellation already agreed to be taken over by MidAmerican, a unit of Warren Buffett's Berkshire Hathaway (BRK.A).
Detroit's Big Three automakers are now asking the government for as much as $34 billion instead of the $25 billion they originally wanted.
Oil and money: Crude prices were flat after recently sinking to a three-year low. U.S. crude for January delivery rose 30 cents to $47.26 a barrel on Wednesday.
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