U.S. stocks open lower after ADP data, political wrangling in focus

U.S. stock markets opened lower on Wednesday, after data showed that the U.S. private sector added fewer-than-expected jobs in September, clouding the outlook for the economic recovery, while lingering concerns over political wrangling in Washington also weighed.

During early U.S. trade, the Dow Jones Industrial Average fell 0.65%, the S&P 500 index declined 0.65%, while the Nasdaq Composite index shed 0.5%.

Payroll processing firm ADP said earlier that non-farm private employment rose by a seasonally adjusted 166,000 in September, below expectations for an increase of 180,000. 

The previous month’s figure was revised down to a gain of 159,000 from a previously reported increase of 176,000.

Market players have closely been looking out for U.S. data reports recently to gauge if they will strengthen or weaken the case for the Federal Reserve to reduce its bond purchases.

Last month the U.S. central bank took markets by surprise with a decision to keep its stimulus program on track, saying it wanted to see more evidence of a sustained economic recovery before tapering.

Meanwhile, investors remained cautious as worries over the impact of a U.S. government shutdown continued after Congress failed to reach an agreement on a budget bill.

Markets were also mulling over how the political deadlock in Washington will impact on negotiations to raise the U.S. debt ceiling, which the U.S. Treasury Department has estimated will be reached by October 17.

Moody's Investors Service warned last month that a failure to raise the debt limit would result in a worse outcome for financial markets than a government shutdown. 

In earnings news, Monsanto saw shares drop 2.7% after the world’s largest seed company reported a worse-than-expected fourth quarter loss. 

Meanwhile, aluminum giant Alcoa fell 2.5% after Deutsche Bank lowered its rating on the stock to “sell” from “hold”, citing weaker aluminum prices.

Across the Atlantic, European stock markets remained lower after Italy’s prime minister survived a confidence vote, while investors digested comments by European Central Bank President Mario Draghi.

The EURO STOXX 50 fell 0.4%, France’s CAC 40 shed 0.9%, Germany's DAX slumped 0.65%, while Britain's FTSE 100 declined 0.6%. 

Italian Prime Minister Enrico Letta survived a vote of confidence in parliament on Wednesday, after Silvio Berlusconi dropped his opposition to the coalition, in a surprise U-turn after announcing Saturday that he was pulling his ministers out of the government.

Meanwhile, Mario Draghi said ECB policymakers considered a rate cut, before leaving rates on hold at 0.5%.

Speaking at the ECB’s post-policy meeting press conference, Draghi said risks to the euro zone economy remain to the downside said the bank viewed the recovery as “weak, fragile and uneven” before reiterating that bank rates would remain at current or lower levels for an “extended period of time”. 

Draghi also reiterated that the ECB remains ready to extend a third round of ultra-cheap loans to banks to safeguard the recovery.

Meanwhile, in the U.K., data showed that activity in the U.K. construction sector slowed slightly in September, but remained close to August’s almost six-year high.

The Markit U.K. construction purchasing managers' index ticked down to 58.9 in September from 59.1 in August. Economists had forecast a reading of 59.2.

During the Asian trading session, Hong Kong's Hang Seng Index rose 0.45%, Australia’s ASX/200 Index ended 0.17% higher, while Japan’s Nikkei 225 Index closed down 2.17%.

Shares in Tokyo traded sharply lower as investors reacted to Prime Minister Shinzo Abe’s sales-tax increase and stimulus plan announced after markets closed on Tuesday.