News

(Reuters) – Stocks were lower on Wednesday as a weaker euro zone report heightened concerns about the region’s fiscal health and domestic data casts doubt on the strength of the economic recovery.

A report by payrolls processor Automatic Data Processing showed U.S. private employers added 119,000 jobs in April, well short of expectations, ahead of Friday’s key payrolls report.

Euro zone factories sank further into decline last month, with the downturn hitting Italy and Spain hard and appearing to take root in France and Germany. European shares erased earlier gains, with the FTSEurofirst 300 .FTEU3 down 0.7 percent.

The reports came a day after the Dow closed at its highest level in more than four years on strong U.S. manufacturing data.

“These aren’t good numbers this morning, they are certainly on the low end of expectations. However, in the broader theme you can’t look at these numbers alone, you can’t isolate them from the broader picture, which is continuing expansion, continuing improvement in U.S. manufacturing,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

“It’s at the low end of the range and I know it’s disappointing, but in the broader context it’s not really a game changer.”

Adding to the negative tone, new orders for U.S. factory goods in March recorded their biggest decline in three years, even as they came in slightly above expectations.

The Dow Jones industrial average .DJI dropped 63.46 points, or 0.48 percent, to 13,215.86. The Standard & Poor’s 500 Index .SPX lost 8.93 points, or 0.64 percent, to 1,396.89. The Nasdaq Composite Index .IXIC fell 11.09 points, or 0.36 percent, to 3,039.35.

Energy was the worst performer among the 10 major S&P sectors, weighed down by an 13 percent drop Chesapeake Energy Corp (CHK.N) to $17.05. The S&P energy index .GSPE lost 1.4 percent. Chesapeake was the most actively traded stock on the New York Stock Exchange.

Analysts pointed to Chesapeake’s higher-than-expected natural gas output, up quarter on quarter, even as the company sought to cut production.

Also, Reuters reported Chief Executive Aubrey McClendon ran a $200 million hedge fund on the side that traded in the same commodities Chesapeake produces.

MasterCard Inc (MA.N), the big credit and debit card network, reported a 21 percent rise in profit. Shares were off 2.5 percent to $445.

CVS Caremark Corp (CVS.N) were up 1.9 percent to $45.55 after the drugstore operator and pharmacy benefits manager posted a sharp rise in first-quarter sales and raised its profit forecast.

American Eagle Outfitters Inc (AEO.N) jumped 12.5 percent to $20.13 after the teen clothing retailer raised its profit forecast.

Of the 350 S&P 500 companies that have reported results through Wednesday morning, 70 percent have topped analysts’ estimates, according to Thomson Reuters data.

Women’s clothing retailer Ascena Retail Group Inc (ASNA.O) will buy Charming Shoppes Inc (CHRS.O) for $857.2 million in an all-cash deal. Charming surged 23.4 percent to $7.28 as the most actively traded Nasdaq stock and Ascena gained 10 percent to $20.92.

Chipmaker Microchip Technology Inc (MCHP.O) will acquire smaller rival Standard Microsystems Corp (SMSC.O) for $829.2 million. Microchip added 0.3 percent to $35.35 and Standard Micro climbed 38.3 percent to $36.28.

Results are Wednesday from 31 S&P 500 companies, including Visa Inc (V.N), Whole Foods Market Inc (WFM.O) and Symantec Corp (SYMC.O).

(Reporting By Chuck Mikolajczak; editing by Jeffrey Benkoe)