Stocks retreat after payroll company says private-sector employers unexpectedly cut jobs

Stocks fall on final day of quarter after job cuts

NEW YORK — Stocks fell Wednesday after a payroll company’s report provided a surprising reminder that the job market remains weak.

ADP said employers slashed 23,000 jobs in March. Economists surveyed by Thomson Reuters had forecast the report would show employers added 40,000 jobs during the month.

The ADP report is seen as an early indicator of the Labor Department’s closely watched monthly employment report, which is due out Friday. However, there can be wide variations because ADP only accounts for private-sector jobs.

Economists expect the government report to show employers added 190,000 jobs in March. It would be only the second monthly increase in jobs since the recession began in late 2007. The number could be somewhat inflated because many temporary workers were hired to conduct the 2010 census.

The weak ADP report tempered some expectations for Friday’s data.

Employment growth is considered vital to a strong, sustained recovery because it will give consumers more confidence to go out and spend money. And consumer spending is the biggest driver of economic activity in the country.

In late morning trading, the Dow Jones industrial average fell 27.44, or 0.3 percent, to 10,879.98. The Standard & Poor’s 500 index fell 2.09, or 0.2 percent, to 1,171.18, while the Nasdaq composite index fell 0.04, or less than 0.1 percent, to 2,410.65.

Bond prices rose after the weak jobs report. The yield on the benchmark 10-year Treasury note, which moves opposite its price, fell to 3.85 percent from 3.86 percent late Tuesday.

The ADP report overshadowed news from the Commerce Department that factory orders rose 0.6 percent last month. Analysts polled by Thomson Reuters forecast an increase of 0.5 percent. The increase was below January’s upwardly revised gain of 2.5 percent. It was the smallest increase since August 2009.

Manufacturing has been one of the more consistent growth areas as the U.S. emerges from recession. Housing and the labor market have not been as strong.

The weaker-than-expected jobs report marks a disappointing end to an otherwise strong first quarter.

Stocks have been on a nearly uninterrupted climb in recent months on growing signs of a steady but slow recovery. Upbeat data such as Tuesday’s report showing a modest jump in consumer confidence have given investors a reason to continue to bid up stocks.

The Dow has risen in 19 of the past 23 trading sessions. It rose nearly 12 points Tuesday. The Dow is up 4.6 percent in the first three months of the year, putting it on track for its best first-quarter performance since 1999.

Volume is expected to remain light during the holiday week, which could exaggerate moves in market indexes. The market will be closed on Friday for Good Friday and some traders have taken off for Passover.

Typical end-of-quarter trading could add to the market’s erratic behavior Wednesday. Some investors will be looking to take some profits at the end of a strong quarter.

The dollar fell against other major currencies, while gold rose.

Crude oil rose 16 cents to $82.53 per barrel on the New York Mercantile Exchange.

Falling stocks outpaced those that rose on the New York Stock Exchange, where volume came to 278.5 million shares compared with 260.5 million shares traded at the same point Tuesday.

The Russell 2000 index of smaller companies rose 1.30, or 0.2 percent, to 685.24.

In afternoon trading, Britain’s FTSE 100 fell less than 0.1 percent, Germany’s DAX index fell 0.1 percent, and France’s CAC-40 fell 0.7 percent. Earlier, Japan’s Nikkei stock average fell 0.1 percent.