Serious doubts about the health of the job market and the pace of the US economic recovery put markets on edge last night.
Stocks fell after payroll processor ADP said companies added 179,000 new jobs in April, far fewer than economists had expected.
That raised worries about what the government's monthly jobs report for April will reveal when it is released on Friday.
In a separate report, the Institute for Supply Management said its service sector index rose at the slowest pace in eight months in April, as many companies express concerns about higher food and gas prices.
The US service industry includes nearly everything that isn't manufacturing - from hospitals and software developers to financial firms and mining companies. It employs about 90% of the US work force, so signs of a slowdown in the service sector index have implications for the overall economy.
"I think we're getting indications that (the US economy) is not that healthy," said Kim Caughey Forrest, equity research analyst at Fort Pitt Capital Group.
Even so, the broader markets are up between 6% and 10% for the year.
Stronger-than-expected earnings reports led to a market rally that started in mid-April. Now that earnings season is coming to an end, job reports are most likely to sway markets over the next two days.
The Labor Department will release its weekly look at first-time applications for unemployment benefits tomorrow morning, followed by the closely watched monthly labour market report on Friday.
Economists forecast that employers added 185,000 workers in April. The unemployment rate is expected to remain unchanged at 8.8%. If the numbers fall short, experts say the broader markets could fall further.
The Dow Jones industrial average fell 83.93 points, or 0.7 %, to close at 12,723.58 today. The average of 30 large companies is still up 10% for the year.
The Standard & Poor's 500 index fell 9.30 points, or 0.7%, to 1,347.32. It remains up 7% for the year.
The Nasdaq composite index fell 13.39, or 0.5%, to 2,828.23. It's up 6.6% this year.
Signs that the economic recovery is slowing also dragged down commodity prices. Silver fell for the third day straight, losing 7.5% to settle at 39.39 dollars an ounce. Crude oil slipped 1.6% to $109.24 a barrel.
And falling prices for oil and metals hurt the energy and materials companies whose fortunes depend on them. Mining giant Freeport-McMoRan Copper & Gold lost 3.9%. Occidental Petroleum lost 2.5%.
Strong earnings results from Apple, Intel and other companies have sent all three indexes to 2011 highs over the past two weeks. But some of that excitement is now fading, said Sam Stovall, chief investment strategist at Standard & Poor's.
"In a sense, the market is already in digestion mode," Stovall said. "The earnings have already come out, they were so much better than expected; much of that has already been factored into share prices."
Earnings results were mixed today. Kellogg said its net income fell 12% as the world's biggest cereal maker dealt with higher costs. The results missed analysts' expectations. Kellogg's stock fell 1.2%.
Time Warner, the owner of Warner Bros and HBO, said its first-quarter earnings fell 10% because of a lack of hit movies in the period. Advertising revenue rebounded, but its shares still fell 3.3%.
AOL's net income dropped sharply as the internet company reported lower advertising and subscription revenue. Its stock fell 1.3%.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury note dropped to 3.22% from 3.26% late Tuesday.
More than two shares rose for every one that fell on the New York Stock Exchange. Trading volume was 4.7 billion shares.