Wall St falls on poor service sector data

US stocks fell yesterday after data showed the vast American services sector unexpectedly shrank in November and investors worried that Friday&rsquo;s non-farm payrolls report may show the recovery is sluggish.<br /><br />Stocks sold off going into the close, led by financials, as <strong>Bank of America&rsquo;s</strong> massive equity offering spurred concerns that other banks could sell new shares and dilute existing shareholders&rsquo; equity. The S&amp;P financial index ended down 2.1 per cent. <br /><br />However, shares of Bank of America, parent of the largest bank ranked by assets, ended up 0.7 per cent at $15.76 on optimism that its plan to repay $45bn of government bailout money will free the bank from government restrictions, especially on executive pay.<br /><br />On the data front, the services sector index fell to 48.7, indicating that this huge component of the US economy had experienced contraction last month, according to a report from the Institute for Supply Management.<br /><br />The ISM data hurt sentiment a day before November's unemployment figures are released in an even more influential economic report.<br /><br />&ldquo;Given ISM today, and given the rally of the last few days, it may be some nervousness ahead of tomorrow&rsquo;s unemployment number,&rdquo; said Kurt Brunner, portfolio manager at Swarthmore Group in Philadelphia, in reference to the malaise on Wall Street.<br /><br />&ldquo;You&rsquo;ll probably see some deterioration in the unemployment rate. One would think you&rsquo;re going to get at least some improvement in the job losses, but it bears being a little cautious.&rdquo;<br />Economists polled by Thomson Reuters forecast a drop of 130,000 nonfarm jobs in <br /><br />November in Friday&rsquo;s report and an unemployment rate holding steady at 10.2 per cent.<br /><br />The Dow Jones industrial average dropped 86.53 points, or 0.83 per cent, to end at 10,366.15. The Standard &amp; Poor&rsquo;s 500 Index slipped 9.32 points, or 0.84 per cent, to close at 1,099.92. The Nasdaq Composite Index fell 11.89 points, or 0.54 per cent, to finish at 2,173.14.&nbsp;&nbsp; <br /><br />Government data showed the number of US workers filing new claims for unemployment benefits fell last week.