Worries that the economic recovery was stalling caused a stock market rout on Wednesday. Payroll processor ADP said private employers added just 38,000 jobs in May, down from 177,000 in April. That, along with a sharply lower reading on a key manufacturing index, sent the Dow Jones industrial average down 280 points, the steepest fall since June 4 of last year.
A series of strong corporate profit reports gave the S&P 500 its best first quarter since 1998, but the index has lost 3.7 percent since April 29 as worries over the economy deepened. The index is still up 4.4 percent for the year.
Several retailers reported muted sales growth for May, adding to concerns that the U.S. economy is straining under higher costs for raw materials like oil and cotton. Companies that catered to middle and lower income shoppers said that higher food and gas prices cut into sales. Gap Inc. fell 4.1 percent after sales fell across all its brands. Target Corp. fell 1.3 percent after missing expectations as sales traffic slowed during the second half of the month.