Financial data hit stock market hard

Good day! Wednesday was an active day for the market as the week's data started to mount. It kicked off in premarket trade with the ADP National Employment Index, which showed that the private sector created 179,000 jobs last month. This was less than what analysts had been anticipating, but it didn't have a strong impact on price action in the index futures. This is not unusual. Friday's employment data will be much more likely to generate a stronger reaction. The Labor Department will also release last week's jobless claims on Thursday morning.

Dow Jones Industrial Average (Figure 1)

When the opening bell rang on Wednesday, the market was relatively unchanged compared to Tuesday's close. This relative peacefulness did not last long. The next data to hit the wires was the Institute for Supply Management's nonmanufacturing index, which fell unexpectedly from 57.3 in March to 52.8 last month. Analysts had been expecting a reading of 57.4. This dramatic decline to an 8-month low hit the market hard.

The indices fell sharply on the news to new lows for the week before slowing at support from a 50% retracement level in the Dow (YM) compared to last week's rally, a 62% fibonacci retracement in the S&Ps (ES), and a 100% retracement in the Nasdaq-100 (NQ). At that point the pace of the sharp selloff diminished although the trend continued into the early afternoon.

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