Wall Street turns negative after weak services data By Tanya Agrawal
REUTERS - U.S. stocks gave up early gains and turned negative on Wednesday after data showed that the economy's service sector expanded at a slower-than-expected rate, raising concerns that weakness in manufacturing is spreading to other sectors.
The Institute for Supply Management (ISM) said its index of non-manufacturing activity fell to 53.5 in January from 55.8 in December. The reading was below expectations of 55.1.
Falling oil prices, tepid U.S. growth and fears regarding a China-led global slowdown have been major factors for a torrid start to the year for stocks. The S&P 500 is already down 6.9 percent this year.
"I think the next couple of quarters could be really volatile," said Bryce Doty, portfolio manager at Sit Investment Associates.
"You need the markets to settle into a new equilibrium without this manipulated support from the Fed, which means a correction. The problem with corrections is that markets tend to over correct before they rebound."
Investors have been keeping a keen eye on U.S. economic data for clues regarding the pace of future rate hikes by the Fed. Fed fund futures are pricing in only one hike this year.
Stocks had opened higher as oil prices rose after two straight days of losses and data showed that the private sector added more jobs than expected in the United States.
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