Wall Street down despite good jobs data

Wall Street fell overnight after stronger-than-expected US private jobs data raised concern the Federal Reserve might begin tapering its bond-buying program sooner than anticipated.

An ADP report showed private employers added 215,000 new jobs to their payrolls in November, the largest increase in a year and comfortably exceeding economists' expectations. Meanwhile, October's rise was revised to 184,000, up from 130,000.

"The market is on alert for any signs of Fed tapering and these ADP numbers will raise those concerns for investors," Stewart Richardson, chief investment officer at RMG Wealth Management in London, told Bloomberg News.

Indeed, those data also boosted expectations for Friday's Labor Department, which was expected to show an increase of 180,000 in nonfarm payrolls, according to a Reuters poll of economists.

"If the ADP does prove to be a good guide, a 200,000 plus gain [in nonfarm payrolls] might just be enough to persuade the Fed to begin its QE taper later this month," Paul Ashworth, chief US economist at Capital Economics in Toronto, told Reuters.

The next two-day meeting of the Federal Open Market Committee begins on December 17.

Policy makers will probably ease the monthly pace of bond buying to US$70 billion at their March 18-19 meeting, according to Bloomberg's most recent survey of economists conducted on November 8.

In afternoon trading in New York, the Dow Jones Industrial Average fell 0.22 per cent, the Standard & Poor's 500 Index slid 0.23 per cent, while the Nasdaq Composite Index edged 0.10 per cent lower.

"When the market starts going a bit down, people worry that they'll lose their year-to-date gains," Richardson said. "Investors are booking profits going into the year end."

Other data released today showed that the Institute for Supply Management's services index fell to 53.9 in November, a slower pace of growth than expected and down from 55.4 in October.

A separate report showed the US trade deficit dropped 5.4 per cent to US$40.6 billion in October, while another showed new home sales soared 25.4 per cent to a seasonally adjusted annual rate of 444,000 units in October.

In Europe, the Stoxx 600 Index dropped 0.6 per cent. The UK's FTSE 100 slipped 0.3 per cent, France's CAC 40 fell 0.6 per cent, while Germany's DAX declined 0.9 per cent.

The latest data here underpinned the fragility of the euro-zone's economic recovery. The region's gross domestic product rose 0.1 per cent in the third quarter, following a 0.3 per cent increase in the previous three months. The economy shrank 0.4 per cent from a year earlier.

European Central Bank policy makers meet on December 5, after their unexpected interest rate cut last month.