RTTNews - Stocks have deepened their losses in afternoon trading on Wednesday, as traders are doing some profit taking following four straight days of gains. The major averages are lingering firmly in negative territory following the release of disappointing economic data earlier in the day.

Ahead of the opening bell, Automatic Data Processing, Inc. (ADP) released a report showing that private sector employment experienced another notable decline in the month of May, with the decrease in jobs slightly exceeding economist estimates.

While a report from the Institute for Supply Management showed a slower pace of contraction in the service sector in the May, the index of activity in the sector increased by less than economists had expected.

Separately, the Commerce Department released data showing a notable increase in factory orders in the month of April, but the increase came after a substantial decline in the previous month and came in slightly below economist estimates.

Traders largely shrugged off comments from Federal Reserve Chairman Ben Bernanke, who said recent data suggests that the economy will likely slow its pace of contraction on the back of improved consumer sentiment and consumer spending.

The major averages are currently posting steep losses, just off their worst levels of the day. The Dow is currently down 129.27 at 8,611.60, the Nasdaq is up 25.76 at 1,811.04 and the S&P 500 is up 19.26 at 925.48.

Dow Components

The majority of the Dow components are retreating in mid-afternoon trading, contributing to the triple digit loss being shown by the blue chip index.

Reflecting notable weakness in the chemical sector, DuPont (DD) is turning in one of the Dow's worst performances, sliding by 4.8 percent on the day. With the pullback, the index is moving off of its best closing level in nearly seven months set on Monday.

Alcoa (AA) and Chevron (CVX) are also under pressure, falling 5.8 percent and 2.5 percent respectively. Alcoa is moving off of its best closing high in over four months, while Chevron is pulling back off a three week closing high. The stocks are being hurt by a drop in commodities prices.

Shares of Citigroup (C), Caterpillar (CAT) and General Electric (GE) are also helping to lead the blue chip index downward.

Despite the day's broad losses, shares of Wal-Mart (WMT) and McDonald's (MCD) are up by 1.3 percent and 0.5 percent, respectively.

Sector News

As equities are testing their worst levels of the session, the major sectors continue to show notable declines in mid-afternoon dealing.

Healthcare stocks are turning in some of the worst performances, with the Morgan Stanley Healthcare Provider Index showing a decline of 3.1 percent on the day. With the pullback, the index is moving off of its best closing level in just over eight months.

Steep losses are also being shown by a variety of resource stocks, with steel, gold and oil stocks all plummeting during today's trading. Gold and oil have been under considerable pressure, with the price of crude oil falling $3.40 a barrel and gold futures plunging by $20.10 an ounce.

While housing, chemical, and semiconductor stocks also continue to post notable losses, biotechnology stocks continue to advance on the day, with the Amex Biotechnology Index surging up 2.5 percent.

In Focus: Economic Data, Bernanke, Corporate News

As discussed earlier, the day's trading has largely been driven by a series of economic reports released earlier in the day.

The ISM said its index of activity in the service sector rose to 44.0 in May from 43.7 in April, although a reading below 50 indicates a continued contraction in the sector. Economists had been expecting a somewhat more notable increase to a reading of 45.0.

Meanwhile, a report from the Commerce Department showed that orders for manufactured goods rose 0.7 percent in April following a revised 1.9 percent drop in March. Economists had expected orders to increase by 0.9 percent compared to the 0.9 percent decrease originally reported for the previous month.

Private payroll processor ADP said non-farm private employment fell by 532,000 jobs in May following a revised decrease of 545,000 jobs in April. Economists had expected a decrease of about 525,000 jobs compared to the decline of 491,000 jobs originally reported for the previous month.

In other news, Federal Reserve Chairman Ben Bernanke told the House Budget Committee Wednesday that the economic contraction may be slowing, although he said there will likely be a significant increase in job losses and unemployment in the next few months.

Bernanke also warned of the potentially dire consequences of allowing the deficit to remain high and called on Congress to consider long-term steps for fiscal balance.

On the corporate front, NetApp (NTAP) said it has made a revised proposal to acquire Data Domain (DDUP). As per the terms of the proposal, NetApp will acquire all outstanding shares of Data Domain common stock for $30 per share in cash and stock in a transaction valued at approximately $1.9 billion.

Shares of Data Domain are currently up by 3.1 percent on the day after reaching their best intraday level in over 18 months earlier in the session.

Meanwhile, Toll Brothers (TOL) reported a second quarter net loss of $83.17 million or $0.52 per share, compared to a net loss of $93.74 million or $0.59 per share last year. Excluding write-downs, the loss was $5.2 million, or $0.03 per share. Wall Street analysts expected a loss of $0.44 per share.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region finished modestly higher on Wednesday. Japan's benchmark Nikkei 225 Index rose by 0.4 percent, while Hong Kong's Hang Seng climbed by 1 percent.

Meanwhile, the major European markets all closed notably lower. The U.K.'s FTSE 100 Index fell by 2.1 percent, while the French CAC 40 Index and the German DAX Index closed down by 2.0 percent and 1.7 percent, respectively.

In the bond markets, treasuries are holding onto strong gains, although they are off of their best levels of the day. Subsequently, the yield on the benchmark ten-year note is down to 3.561 percent, a drop of 8.3 basis points on the day.

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