Wall Street Dips On Employment News, Profit Outlooks

New York, NY (AHN) - U.S. markets opened lower Wednesday and failed to rally after ADP reported a much larger than expected drop in private employment during December. Additional selling pressure came later in the day when Time Warner and Intel offered lower outlooks.

The ADP National Employment Report showed a drop of 693,000 in December non-farm private sector jobs. The December decline marks the worst monthly drop since the report's creation in 2001. The drop in jobs was also much higher than the 473,000 economists had expected.

Elsewhere, Time Warner Inc. said it will likely report a fourth quarter loss due to $25 billion in write-downs. The quarterly loss will be the first in nearly six years and may lead to a net loss for 2008 on a whole.

Intel also offered a downward revision, stating that fourth quarter revenue would be down 20 percent and off 23 percent year-over-year.

The announcements pressured the markets most of the day. The Dow Jones Industrial average fell 245 points or 2.7 percent, it worst decline in 2009 to date. 27 of 30 Dow components finished the session lower.

Alcoa, down 10.1 percent, was the biggest Dow laggard as shares dipped on news the aluminum maker is cutting 13,500 jobs and reducing production by roughly 18 percent.

The S&P 500 fell 28 points or 3 percent. The financial sector weighed on the index most, down 5.1 percent on Wednesday.

Tech was the weakest as the Nasdaq Composite fell 53 points or 3.2 percent. In addition to the Intel news pressuring the sector, shares of Microsoft, down 6 percent, also weighed on tech.

Microsoft shares fell despite news that Verizon picked the company over Google and Yahoo to be its internet search provider.

Crude oil slid 12 percent after the Energy Information Administration reported a surge in oil reserves for the week ending Jan. 2. The news helped quell fears that tension in the Middle East would disrupt supplies of the commodity. Oil shed $5.95 a barrel to settle at $42.63.

Thursday's market will see the release of initial unemployment claims for the week ending Jan.3. The level of consumer credit for November is also due for release.