US stocks tumble on weak economic data

NEW YORK (AFP) - US stocks tumbled on Wednesday following weak employment and manufacturing data, and as the Federal Reserve stuck to its aggressive economic stimulus programme.

The Dow Jones Industrial Average lost 138.85 (0.94 per cent) to 14,700.95.

The broad-based S&P 500 fell 14.87 (0.93 per cent) to 1,582.70, while the tech-rich Nasdaq Composite Index sank 29.66 (0.89 per cent) to 3,299.13.

Wednesday's losses came after the ADP job report showed April job growth fell to the slowest level in seven months. Markets were also disappointed by an Institute for Supply Management report that showed manufacturing activity slowed sharply in April.

Meanwhile the Federal Reserve kept its US$85 billion (S$104.8 billion) a month bond-buying program in place, while raising the possibility that it could do more if necessary.

Even so, the Fed's announcement suggested there is a high bar for increasing its bond-purchases, said IHS Global Insight economist Paul Edelstein.

"The markets weren't too impressed by what the Fed had to say," Mr Edelstein said.

Dow member Merck Wednesday became the second major pharmaceutical company to lower its 2013 profit guidance after Pfizer slashed its forecast on Tuesday.

Merck shares fell 2.7 per cent after it cut its full-year 2013 sales forecast by 3-4 per cent.

Other Dow components to see outsized falls included Cisco (-2.6 per cent) and Verizon (-2.8 per cent).

MasterCard lost 2.4 per cent despite besting analyst forecasts for profits.

Credit Suisse characterised company revenues as "light of expectations" and said the near-term outlook looks "somewhat sluggish." Medical device and pharmaceutical company Allergan tumbled 13.1 per cent after the company acknowledged it needed to undertake additional tests on two key pipeline drugs. Morgan Stanley downgraded the stock on the news.

Health care company Humana jumped 4.7 per cent after announcing better-than-expected earnings and reestablishing and increasing its share repurchase programme to as much as US$1 billion.

Bond prices rose. The yield on the 10-year Treasury fell to 1.64 per cent from 1.67 per cent late Tuesday, while the yield on the 30-year bond sank to 2.84 per cent from 2.88 per cent.