U.S. Stocks Decline on Fed Bets After ADP Jobs Report

U.S. stocks fell a fourth day, the longest slump in 10 weeks for the Standard & Poor's 500 Index, as investors weighed whether a larger-than-forecast rise in jobs data will prompt the Federal Reserve to cut stimulus.

The S&P 500 (SPX) dropped 0.3 percent to 1,790.59 at 9:30 a.m. in New York. The gauge has fallen 1 percent since closing at a record on Nov. 27.

"The market's concern about tapering sooner than later is what's initially driving it," Eric Green, director of research and fund manager at Penn Capita Management, said by phone. The Philadelphia-based firm oversees about $7 billion. "Good news has been met with generally mixed reception from the market. Very good news has caused more of a sell-off, and I think this is very good news."

The S&P 500 has surged 25 percent this year, challenging 2003 for the biggest annual gain in the last 15 years, as the Fed has refrained from reducing its monthly bond purchases. Central-bank policy makers have been scrutinizing data to determine whether the economy is robust enough to withstand a reduction in their monetary support, which has helped propel the benchmark index higher by 165 percent from a bear-market low in March 2009.

Companies boosted payrolls in November by the most in a year, a sign that U.S. employers were optimistic about demand after the end of a government shutdown a month earlier, a private report based on payrolls showed today.

The 215,000 increase in employment exceeded the most optimistic forecast in a Bloomberg survey and followed a revised 184,000 gain in October that was larger than initially estimated, according to the ADP Research Institute in Roseland, New Jersey. The median forecast of economists called for a 170,000 advance.

Labor Department data on Friday may show the unemployment rate fell to 7.2 percent, matching the lowest level since 2008.

Data Watch

The trade deficit in the U.S. narrowed in October for the first time in four months as exports climbed to a record, the Commerce Department said today.

A separate release at 10 a.m. in Washington will show property developers sold 429,000 new properties at an annualized rate in October, according to economists surveyed by Bloomberg. Another report at the same time may show the Institute for Supply Management's non-manufacturing index fell to 55 in November from 55.4 in the preceding month.

The Fed has said it will start paring its $85 billion of monthly bond purchases if the economy improves in line with its forecasts. The central bank releases its Beige Book report on economic conditions in its 12 districts at 2 p.m. in Washington.

The Federal Open Market Committee next meets on Dec. 17-18. Policy makers will probably wait until their March 18-19 meeting before reducing their monthly bond purchases to $70 billion, according to the median estimate in Bloomberg's most recent survey of economists conducted on Nov. 8.

The S&P 500's rally this year has pushed valuations higher, with the gauge trading for about 16.9 times its companies' reported earnings, up 19 percent from the beginning of 2013 when it traded at 14.2 times profit.