Disappointing manufacturing and employment data released on Wednesday caused Wall Street traders to reassess their exposure as the major averages sit near all-time highs.
The reports, along with some geopolitical uncertainty relating to North Korea, dampened risk appetite on the session, sending the Dow down triple digits. Crude oil and precious metals prices also fell on the session despite a weaker U.S. dollar.
Although the investing climate remains very favorable, the sell-off could be a sign of a further correction driven by profit taking as both the Dow and S&P hit all-time highs on Tuesday.
The Dow Jones Industrial Average declined 112 points, or 0.76 percent, to close at 14,550.
The S&P 500 lost almost 17 points, or 1.05 percent, to 1,554.
The Nasdaq fell 36 points, or 1.11 percent, to 3,219 on the session.
ADP Employment Change
ADP employment data showed that fewer jobs were created in March than had been expected. This put a damper on investor risk appetite on Wednesday, sending the major averages lower.
The data showed that only 158,000 jobs were created for the month compared to expectations of a 197,000 job uptick. This was down sharply from the prior month when 237,000 jobs were created.
The ISM non-manufacturing index fell in March to 54.4 from 56.0 in February. A number above 50 indicates expansion whereas a number under 50 represents contraction. The data for last month came in below consensus expectations which called for a drop to 55.5.
Crude oil prices tumbled on Wednesday along with risk appetite in general. Near the close of equities, NYMEX crude futures were trading down 3 percent to $94.37. Brent crude oil was last down 3.20 percent to $107.32. Natural gas futures lost roughly 1.44 percent on the session to $3.90.
Precious metals prices also fell on the session along with equities and most other commodities. COMEX gold futures had lost 1.19 percent to $1,556.40 while silver futures had shed a little better than 1 percent to $26.93. Copper was last down more than 1.50 percent on Wednesday.
While most risk assets declined on the day, both corn and wheat were higher. Corn futures were last up around 0.16 percent while wheat prices jumped nearly 4 percent on the session. In soft commodities, coffee added more than 2 percent while cocoa prices lost around 1 percent.
Near the close of equity trading, the iShares Barclays 20+ Year Treasury Bond ETF (NYSE:TLT) had risen almost 1 percent to $119.06 on risk aversion. The rise in prices pushed yields lower on the day.
The yield on the 2-Year Note declined by one basis point to 0.23 percent while the 5-Year yield lost five basis points to 0.72 percent. The 10-Year Note yield and 30-Year Bond yield both declined by five basis points to 1.81 percent and 3.05 percent, respectively.
The U.S. dollar fell on Wednesday after weak economic data. Near the close, the PowerShares DB US Dollar Index Bullish ETF (NYSE:UUP), which tracks the performance of the greenback versus a basket of foreign currencies, was down 0.27 percent to $22.51.
The closely watched EUR/USD pair was last up 0.17 percent to $1.2845. Other movers included the USD/JPY, which fell 0.55 percent, and the GBP/USD, which rose 0.25 percent.
Volatility and Volume
The VIX jumped on Wednesday as investors sold stocks. The widely watched barometer of market fear surged 11.50 percent to 14.25.
Volume was a little heavier than usual amid the sell-off. Around 136 million SPDR S&P 500 ETF (NYSE:SPY) shares traded hands compared to a 3-month daily average of 124 million.
NII Holdings (NASDAQ:NIHD) surged more than 21 percent on Wednesday after reports surfaced that Chilean phone company Entel is interested in purchasing NII's Peruvian business unit for $500 million.
Online game-maker Zynga (NASDAQ:ZNGA) rose better than 15 percent after the company launched its first real-money gambling titles in the United Kingdom.
Conn's (NASDAQ:CONN) jumped more than 8 percent on Wednesday after the company reported its fiscal fourth-quarter financial results and raised its profit outlook.
Fifth & Pacific (NYSE:FNP) rose a little less than 8 percent on the session on a Wall Street Journal report which suggested that the company may be considering a sale of its Lucky Brand and Juicy Couture brands.
Acuity Brands (NYSE:AYI) rose more than 5 percent on Wednesday after the company released its fiscal second-quarter financial results.
ConAgra (NYSE:CAG) lost around 2 percent after the company's fiscal third-quarter results.
Global Payments (NYSE:GPN) fell more than 9 percent on the day after releasing disappointing fiscal third-quarter earnings and revenue.
Tesla (NASDAQ:TSLA) gave back some recent gains on Wednesday as the company unveiled its leasing program. The stock closed down more than 7 percent to $41.10.
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