U.S. stocks fell on Wednesday as disappointing economic data overshadowed enthusiasm over new merger activity.
The weak data sparked more selling from investors worried that a recent rally has reached levels that aren't supported by economic fundamentals. Recent winners, including the energy and materials sectors, were the biggest losers in the early going.
The Institute for Supply Management's services index fell last month well below forecasts, while U.S. private employers added fewer jobs than expected in April, disappointing some who hoped for stronger growth ahead of Friday's key jobs report.
The economic numbers were a little on the light side and the market will struggle some once we get out of earnings season and that may be some of what we are seeing now, said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
The Dow Jones industrial average <.DJI> dropped 88.70 points, or 0.69 percent, to 12,718.81. The Standard & Poor's 500 Index <.SPX> fell 9.11 points, or 0.67 percent, to 1,347.51. The Nasdaq Composite Index <.IXIC> lost 9.41 points, or 0.33 percent, to 2,832.21.
Chip equipment maker Applied Materials Inc
Varian shares surged 51 percent to $61.23, and Applied Materials dipped 1.1 percent to $15.07.
ConAgra Foods Inc
Ralcorp jumped 7.3 percent to $89.38, and ConAgra added 4 percent to $25.73.
(Reporting by Chuck Mikolajczak; editing by Jeffrey Benkoe)