NEW YORK (AP) – A disappointing report on services industries halted a two-day advance in the stock market.
The Dow Jones industrial average fell 26 points Wednesday after jumping a total of 230 points in the first two days of the week. The broader Standard & Poor’s 500 index posted a steeper drop, while the Nasdaq composite index was little changed.
The report on services businesses, which make up the biggest slice of the US economy, reminded investors that a recovery will be slow.
The Institute for Supply Management said its index of service activity rose to 50.5 in January from a revised 49.8 in December. The January reading was below the level of 51 analysts polled by Thomson Reuters had been expecting. Any number above 50 signals growth.
The weaker activity in service companies chilled enthusiasm about a report that private employers cut fewer jobs than expected last month. The news on jobs from ADP, a payroll company, comes ahead of the government’s January employment report on Friday. It is expected to show employers added 5,000 jobs in the first month of the year but that unemployment edged up to 10.1 percent from 10 percent.
ADP said employers cut 22,000 non-farm, private jobs last month. That was the best showing since employment started to weaken in February 2008.
A reduced forecast from Pfizer Inc. dragged health care stocks lower. Meanwhile, bank stocks fell after PNC Financial Services Group Inc. said it would repay $7.6 billion in bailout funds to the US government. Traders grew concerned that other regional banks would face pressure to follow suit.
The market could get a boost Thursday from Cisco Systems Inc. The world’s largest maker of computer networking equipment issued earnings and forecasts after the closing bell Wednesday that came in well ahead of expectations. CEO John Chambers, an important voice on Wall Street, said strengthening in the company’s business was “a clear indication that we are entering the second phase of the economic recovery.”