NEW YORK (Reuters) - U.S. stocks fell for a second day on Wednesday and the dollar dipped after weak U.S. private sector employment and manufacturing data fed worries about the U.S. economy ahead of a highly anticipated jobs report Friday.
Oil futures rallied as U.S. crude output fell for the first time in two months and the government said stockpiles grew less than some had feared. Also, Iran nuclear talks dragged on, making traders less nervous about a possible supply boost. [O/R]
The ADP National Employment Report showed that U.S. private employers added 189,000 jobs last month, well below economists' expectations for 225,000 jobs. The report was the weakest since January 2014. A separate report showed U.S. manufacturing growth in March was at its slowest pace in almost two years.
The dollar .DXY dipped 0.13 percent against a basket of currencies after falling as much as 0.38 percent. The soft economic data reinforced the notion that the recent surge in the greenback has hit exports and dragged on the economy, which would worry Fed policymakers.
"People continue to have concerns about earnings weakness and economic weakness," said Stephen Massocca, chief investment officer, Wedbush Equity Management LLC in San Francisco. "The weather and the currency moves are going to have an impact on American businesses for the first quarter. This is going to become a recurring theme in the couple of weeks."
The Dow Jones industrial average .DJI fell 78.2 points, or 0.44 percent, to 17,697.92, the S&P 500 .SPX lost 8.2 points, or 0.4 percent, to 2,059.69 and the Nasdaq Composite .IXIC dropped 20.66 points, or 0.42 percent, to 4,880.23.
Treasury debt prices rose, with yields on the benchmark 10-year note slipping below 1.9 percent as investors bet that lackluster economic data may keep the Federal Reserve from raising rates until the end of 2015.
The decline in equities may have been exacerbated because many traders were away ahead of Friday's market holiday, also the day of the monthly jobs report said Andrew Frankel, co-president of Stuart Frankel & Co in New York.
"You don't have people here saying, I'm going to stand up with conviction. They'd rather wait until next week," he said.
In commodities markets, Brent crude LCOc1 settled up 3.6 percent to $57.10 a barrel. U.S. crude LCOc1 rose 5.2 percent to $50.09.
Government data showed U.S. crude inventories rose 4.8 million barrels in latest week. Fears of a bigger increase had been stoked a day earlier, when the American Petroleum Institute said stockpiles rose as much as 5.2 million barrels. [API/S]
In Switzerland, Iran and six world powers were closer to a preliminary accord on Tehran's nuclear program, but talks were stuck over key details such as lifting U.N. sanctions and atomic research.
The rebound in oil prices made the S&P 500 energy sector, the index's best performer for the day. [.N]
Additional reporting by Michael Connor in New York; Editing by Bernadette Baum, Leslie Adler and David Gregorio