Stocks open lower after weak payrolls data

NEW YORK (Reuters) – Stocks fell at the open on Wednesday as weak data on the labor market became the latest in string of soft economic reports.

U.S. private employers added a scant 38,000 jobs in May, far below expectations and the lowest level since September 2010, ADP Employer Services reported.

The S&P has risen in the four prior sessions, even as data Tuesday showed a drop in business activity in the U.S. Midwest, adding to other regional reports pointing to slower growth in manufacturing this month amid supply chain disruptions from the March earthquake and tsunami in Japan.

That bodes poorly for Institute for Supply Management manufacturing, which is expected to slow, and cast a cloud ahead of a report on national employment on Friday.

The ISM monthly factory indicator, due at 10 a.m. EDT (1400 GMT), is seen easing to 57.7 from the prior month’s 60.4.

Construction spending for April is expected to show a rise of 0.3 percent after March’s increase of 1.4 percent. The data is also due at 10 a.m.

“It fits very neatly in with the puzzle we are putting together that speaks to another soft patch and really, a genuinely failed stimulus approach to growing the economy,” said Peter Kenny, managing director at Knight Capital in Jersey City, New Jersey.

“And it’s not just about jobs. It’s about manufacturing, it’s about real estate, it’s about consumer confidence. This is one data point in a very broad picture, and it’s not encouraging.”

The Dow Jones industrial average <.DJI> dropped 43.29 points, or 0.34 percent, to 12,526.50. The Standard & Poor’s 500 Index <.SPX> lost 4.21 points, or 0.31 percent, to 1,340.99. The Nasdaq Composite Index <.IXIC> fell 5.40 points, or 0.19 percent, to 2,829.90.

Macy’s Inc edged up 0.4 percent to $29.01 after the department store operator posted a 7.4 percent increase in May same-store stores, beating expectations.