*
U.S. service sector slows in March; inflation cools
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March private payrolls miss estimates
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FedEx up, company to consolidate operating divisions
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Indexes mixed: Dow up 0.24%, S&P down 0.33%, Nasdaq down
1.20%
(Updates prices throughout)
By Ankika Biswas and Amruta Khandekar
April 5 (Reuters) - The S&P 500 and the Nasdaq fell on
Wednesday as a slew of weak economic data deepened worries that
the rapid interest rate hikes by the Federal Reserve may tip the
U.S. economy into a recession.
Nvidia Corp was among top drags on the S&P 500,
down 2.9%, after Alphabet Inc's Google said the
supercomputers it uses to train its artificial intelligence
models were faster and more power-efficient than comparable
systems from the chipmaker.
Major technology and growth stocks such as Meta Platforms
Inc , Tesla Inc and Amazon.com Inc slipped between 1.5% and 4.0%.
On the data front, the ADP National Employment report showed
U.S. private employers hired far fewer workers than expected in
March, adding to signs of a cooling labor market, following
Tuesday's weak job openings data.
Further, the Institute for Supply Management's survey showed
the services sector slowed more than expected last month on
cooling demand, while a measure of prices paid by services
businesses fell to a near three-year low.
Earlier this week data showed falling factory orders and
soft manufacturing activity.
Focus will now be on the monthly non-farm payrolls, a more
comprehensive employment report, due on Friday for further clues
on the state of the labor market.
"If we paint a broader picture of what's happening in the
economy right now, we're looking at weakening labor data,
inflation that is falling but is still stubbornly high," said
Brian Klimke, investment director at Cetera Investment
Management.
"So it does appear that we are headed toward a recession."
With growing concerns about a worsening economic outlook
following the recent turmoil in the banking sector, market
expectations have shifted in favor of the U.S. central bank
hitting the brakes on its interest rate hikes.
Traders' bets of a pause by the Fed in May stood at 60.5%,
while odds of a 25-basis point interest rate hike was at 39.5%,
according to CME Group's Fedwatch tool.
Defensive stocks such as consumer staples were in
the green among major S&P 500 sectors, with healthcare and utilities hitting their highest in close to two
months.
Keeping the Dow Jones afloat, Johnson & Johnson gained 3.3% after its $8.9-billion offer to settle talc-related
lawsuits gained support of thousands of claimants, easing an
overhang on its plans to list consumer health unit Kenvue.
At 11:39 a.m. ET, the Dow Jones Industrial Average was up 80.99 points, or 0.24%, at 33,483.37, the S&P 500 was down 13.72 points, or 0.33%, at 4,086.88, and the Nasdaq
Composite was down 145.17 points, or 1.20%, at
11,981.16.
The benchmark S&P 500 and the tech-heavy Nasdaq are now on
track for their first weekly declines in four in the
holiday-shortened week.
FedEx Corp rose 1.2% as the freight bellwether firm
said it will fold its operating divisions into one organization
as it steps up efforts to cut costs and increase efficiency.
Declining issues outnumbered advancers for a 2.22-to-1 ratio
on the NYSE and a 2.36-to-1 ratio on the Nasdaq.
The S&P index recorded eight new 52-week highs and two new
lows, while the Nasdaq recorded 23 new highs and 185 new lows.
(Reporting by Ankika Biswas and Amruta Khandekar in Bengaluru;
Editing by Nivedita Bhattacharjee and Shounak Dasgupta)
