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Stocks slide after weak economic reports

A trader works on the floor of the

A trader works on the floor of the New York Stock Exchange Tuesday. The Dow Jones sank about 217 points to close at 14,960.59. (June 4, 2013) Photo Credit: Getty Images

A series of weak economic reports sent the Dow Jones industrial average plunging about 217 points Wednesday, to close below 15,000.

The troubling economic data included weak hiring at private companies, orders to U.S. factories that were lower than expected and sluggish job growth in the service sector.

Companies like miners, banks and chemical makers, whose fortunes are most closely tied to the prospects for growth, fell the most. That's a sign investors are becoming less confident in the U.S. economy.

The Dow Jones industrial average closed at 14,960.59, a drop of 1.43 percent. It's the first close below 15,000 since May 6.

Stocks started lower and declined steadily throughout the day. After rising every month this year and climbing to record levels this spring, some said a pullback was overdue.

"The rally is tired and people are taking some profits." said Brad Reynolds, at investment adviser LJRP.

Investors were also unnerved by a plunge in mortgage applications last week. The rebound in housing has supported the stock market's record-breaking rally this year.

Applications for home loans dropped 11.5 percent from a week earlier, the Mortgage Bankers Association said Wednesday. The decline came as mortgage rates rose. The rate for a 30-year fixed-rate mortgage rose to 4.07 percent last week from 3.90 percent.

There was also disappointing news on hiring, another key support for the market's rally this year.

A measure of employment in the service sector fell to the lowest level since last July. Service companies, a broad category that includes entertainment, transportation and health care, have been the main source of job gains in the past several months.

That report was released shortly after payroll provider ADP said U.S. businesses added just 135,000 jobs in May, the second straight month of weak gains. The increases are much lower than those reported over the winter, which averaged more than 200,000 a month from November through February.

The Standard & Poor's 500 index was down 1.38 percent to 1,608. The index is about 3 percent below its record close of 1,669 reached May 21. The Nasdaq composite index fell 1.27 percent to 3,401.48.

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