While you were sleeping: Wall Street slips as data disappoints

Wall Street sank amid disappointing jobs data and concern that the US Federal Reserve will roll back its stimulus measures.

"Overall economic activity increased at a modest to moderate pace," the Fed says in its Beige Book. "Hiring increased at a measured pace in several districts, with some contacts noting difficulty finding qualified workers."

The Fed is looking for substantial improvement in the labour market before tapering its $US85 billion a month bond-buying programme. Fed chief Ben Bernanke raised concern when he suggested a couple of weeks ago that the pace could be adjusted in the next few months.

The next FOMC meeting begins on June 18.

Meanwhile, private employers added 135,000 jobs in May, according to the ADP National Employment Report. That was short of expectations. April's private payrolls were revised down to a gain of 113,000.

"We have been seeing significant differences in ADP and non-farm payrolls for months but, regardless, it still doesn't suggest that the labour market is strong enough for the Fed to start tapering," Andrew Wilkinson, chief economic strategist at Miller Tabak & Co, told Reuters.

The US government's monthly jobs report, due on Friday, is expected to show total employment, including government workers, rose by 165,000 in May, according to the median estimate of 86 economists in a Bloomberg survey. That is the same as the gain in April.

In late afternoon trading in New York, the Dow Jones Industrial Average shed 1.25 percent, the Standard & Poor's 500 Index sank 1.31 percent and the Nasdaq Composite fell 1.22 percent.

"I think we're at the point where there hasn't been a lot of good news, and the level of concern over the Fed's next action is kind of overwhelming," Fred Dickson, chief market strategist at DA Davidson & Co in Lake Oswego, Oregon, told Reuters.

"The pullback that started a couple of weeks ago with Bernanke's comments has picked up momentum."

US Treasuries benefited. The yield on the 10-year bond fell 5 basis points to 2.09 percent.

It was not all bad news. The Institute for Supply Management's services index rose to a better-than-expected 53.7 in May, from 53.1 in April.

Europe's benchmark Stoxx 600 Index finished the day 1.5 percent weaker from the previous close. Germany's DAX fell 1.2 percent, France's CAC 40 dropped 1.9 percent, while the UK's FTSE 100 retreated 2.1 percent.

Part of the impetus for the global selling was the release of a text of a speech by Japan's Prime Minister Shinzo Abe outlining plans to bolster growth. The plans, though, failed to meet expectations. He is to detail his initiatives next week.

(BusinessDesk)