* ISM and ADP data hurt investor sentiment
* P&G falls after disappointing outlook
* Financials limit losses, AIG surges 62.7 pct
* Dow off 0.4 pct, S&P off 0.3 pct; Nasdaq off 0.9 pct
* For up-to-the-minute market news click []
(Updates to close)
By Leah Schnurr
NEW YORK, Aug 5 (Reuters) - U.S. stocks slipped on
Wednesday after weak data on the services sector and private
payrolls cooled recent optimism the recession was retreating,
but the market finished off its lows as investors ventured
into riskier financial shares.
The market's decline came on the heels of a four-day rally
that had driven the three major U.S. stock indexes to close on
Tuesday at their highest levels in nine to 10 months.
The services sector contracted in July, data showed, while
another report said private employers cut 371,000 jobs last
month. The ADP private-sector jobs report increased investors'
caution ahead of Friday's government data on July non-farm
payrolls.
The data "reminds everyone this economic healing process
is uneven and not every data point is going to go in a market-
friendly direction," said Jeff Kleintop, chief market
strategist at LPL Financial in Boston.
Disappointing corporate outlooks also weighed on the
market and spurred investors to ease off from a rally that had
pushed the Dow and the S&P 500 to nine-month highs. The Nasdaq
had finished Tuesday's session at its highest close since
early October.
Consumer products giant Procter & Gamble <PG.N> was the
biggest drag on the Dow after it reported a slide in quarterly
sales. P&G's stock tumbled 2.8 percent to $53.91. For details,
see []
But some of the market's worst performers, including
American International Group <AIG.N>, surged as confidence in
the recent rally spread to companies with the biggest question
marks still hanging over them. Analysts also pointed to a
short squeeze as investors who had bearish bets scrambled to
buy back their short positions on fears that stocks would
continue to rise.
AIG shot up 62.7 percent to $22 ahead of the company's
second-quarter earnings on Friday, which are expected to
stabilize for the first time in five years. []
The Dow Jones industrial average <> slipped 39.22
points, or 0.42 percent, to 9,280.97. The Standard & Poor's
500 Index <.SPX> shed 2.93 points, or 0.29 percent, to
1,002.72. The Nasdaq Composite Index <> lost 18.26
points, or 0.91 percent, to 1,993.05.
Among other financial stocks, Bank of America <BAC.N>
jumped 6.5 percent to $16.66, while the S&P financial index
<.GSPF> jumped 3.3 percent.
In other earnings news, Dean Foods <DF.N> sank 9.2 percent
to $19.38 after it gave a disappointing outlook.
[]
Baker Hughes <BHI.N> and Transocean <RIG.N> also fell
after they reported quarterly results that missed
expectations. [] Baker Hughes' stock lost 7.8
percent to $38.68, while Transocean's shares slid 3.4 percent
to $77.60.
On the data front, the Institute for Supply Management's
services index dropped to 46.4 in July. Any reading below 50
indicates a contraction in the service sector, which accounts
for about 80 percent of economic activity in the United
States. []
A report from ADP showed that private employers cut
371,000 jobs in July, suggesting the labor market remained
weak. The U.S. Labor Department's non-farm payrolls report at
the end of the week is expected to show 320,000 jobs were lost
in July, according to economists polled by Reuters.
In a splash of positive data after the regular trading
session began, the Commerce Department said new orders
received by U.S. factories unexpectedly rose in June,
advancing for a third-straight month.
(Reporting by Leah Schnurr; Editing by Jan Paschal)
