U.S. stocks dropped Wednesday, with the Dow Jones Industrial Average falling more than 100 points, after new data showed the U.S. private sector created fewer jobs last month -- the fewest since January 2014. The economic measure is widely used as a pre-indicator to gauge the relative health of the U.S. labor market ahead of Friday's highly anticipated monthly employment report.

Meanwhile, Federal Reserve Chairwoman Janet Yellen warned in Washington on Wednesday that stock market valuations are “quite high” and could be a potential source of financial instability.

In morning trading, the Dow (INDEXDJX:.DJI) dropped 109.10 points, or 0.61 percent, to 17,820.03. The Standard & Poor's 500 (INDEXNASDAQ:.IXIC) dipped 7.71 points, or 0.37 percent, to 2,081.75. The Nasdaq composite (INDEXSP:.INX) fell 22.48 points, or 0.46 percent, to 4,916.85.

Yellen warned current equity valuations are high, which could pose "potential dangers," but added that risks to financial market stability are moderate.

“I would highlight that equity-market valuations at this point generally are quite high,” Yellen said Wednesday in a response to a question during a conference on finance with International Monetary Fund Managing Director Christine Lagarde. “Now, they’re not so high when you compare the returns on equities to the returns on safe assets like bonds, which are also very low, but there are potential dangers there.”

Much of the focus this week will be on the jobs report for April, due out Friday, after March's sharp hiring slowdown. The ADP National Employment Report released Wednesday revealed U.S. private employers added 169,000 jobs in April, below economists' expectations. Economists had expected a gain of 200,000 jobs, analysts polled by Thomson Reuters said.

Technology companies were among the biggest decliners in the Dow, with Microsoft Corporation (NASDAQ:MSFT) and Apple Inc. (NASDAQ:AAPL) falling 1.8 and 1.3 percent, respectively. Meanwhile, shares of International Business Machines Corp. (NYSE:IBM), the world's largest technology services company, were down 1 percent, while chipmaker Intel Corporation (NASDAQ:INTC) lost 1.2 percent.

Shares of Salesforce.com Inc. (NYSE:CRM) gained 1 percent Wednesday, a day after gaining 1.6 percent in reaction to Bloomberg report that said software giant Microsoft is evaluating a bid for the cloud computing company. Microsoft's stock has gained just 0.67 percent so far this year. 

Meanwhile, Apple announced Wednesday it is planning another bond sale, a seven-part offering that the world's most valuable company will use to help pay for previously announced share buybacks and dividends, the company said in a preliminary filing with the U.S. Securities and Exchange Commission. The move comes a week after the iPhone maker said it plans to boost its capital return program to $200 billion and will raise its dividend 11 percent.

Apple shares have shed more than 5 percent since the company issued a "no comment" last week on reports a key component in the Apple Watch was found to be defective, despite posting quarterly earnings April 28 that surpassed Wall Street estimates.

The Nasdaq Biotechnology index jumped more than 1 percent Wednesday after Synageva Biopharma Corp. (NASDAQ:GEVA) shares skyrocketed more than 115 percent to $206.96 in morning trading. Alexion Pharmaceuticals Inc. (NASDAQ:ALXN) announced it will buy the biopharmaceutical company for $8.4 billion to boost its drug pipeline. Following the announcement, Alexion’s stock dropped 9 percent to $152.78.

Oil prices hit new highs for the year Wednesday, driven by a disruption to crude exports from Libya. Crude extended gains in morning trading after U.S. stockpiles fell by 3.9 million barrels for the week ended May 1, compared with expectations for a 1.5 million barrel build, the U.S. Energy Information Administration said Wednesday.

Following the report, West Texas Intermediate crude, the benchmark for U.S. oil prices, gained 2.6 percent to $61.99 a barrel, for June 15 delivery, on the New York Mercantile Exchange. Brent crude, the benchmark for global oil prices, added 2.4 percent to $69.19 a barrel, for June 15 delivery, on the London ICE Futures Exchange.

Notable companies reporting quarterly earnings after the closing bell Wednesday include Tesla Motors Inc., Whole Foods Market Inc., Wendy's International Inc., Sodastream International Ltd. and Twenty-First Century Fox Inc.