By Sinead Carew
NEW YORK (Reuters) - U.S. stocks fell for a second straight day on Wednesday and the dollar dipped after weaker-than-expected private sector employment data spurred concerns that the keenly awaited monthly U.S. jobs report on Friday could point to slowing economic growth.
Oil futures rallied as U.S. stock builds came in at a lower level than feared and talks over Iran's nuclear program dragged on, curbing expectations of an immediate deal that would allow Iranian crude on to an already saturated market. [O/R]
The ADP National Employment Report showed that U.S. private employers added 189,000 jobs last month, well below economists' expectations for 225,000 jobs. The report was the weakest since January 2014.
Treasury debt prices were up on Wednesday, with yields on the benchmark 10-year note slipping below 1.9 percent as investors bet that the Federal Reserve may not raise rates until the end of 2015.
"The market is bracing for the payrolls number on Friday," said Wilmer Stith, fixed-income portfolio manager at Wilmington Trust in Baltimore. "We got a little disappointing ADP number. Interest rates are lower worldwide, and all that's propelling Treasury prices higher."
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At 1:49 p.m.(1749 GMT) the Dow Jones industrial average fell 57.72 points, or 0.32 percent, to 17,718.4, the S&P 500 lost 6.36 points, or 0.31 percent, to 2,061.53, and the Nasdaq Composite dropped 25.68 points, or 0.52 percent, to 4,875.21.
Weaker-than-expected U.S. manufacturing data added to concern about the upcoming quarterly earnings season, with the decline in equities likely exacerbated because many traders are away ahead of Friday's market holiday, said Andrew Frankel, co-president of Stuart Frankel & Co in New York.
"You don't have people here saying, I'm going to stand up with conviction. They'd rather wait until next week," he said.
The dollar was down 0.25 percent against a basket of major currencies after falling as much as 0.38 percent. The soft economic data reinforced the notion that the recent surge in the greenback has hurt exporters and dragged on the economy, which would worry Fed policymakers.
In commodities markets, Brent crude rose 3.8 percent to $57.22 a barrel. U.S. crude was up 5 percent at $49.97.
Government data showed crude inventories in the United States rose by 4.8 million barrels to 471.4 million in the week ending March 27. Some had feared a bigger rise after the American Petroleum Institute, an industry group, suggested an increase of as much as 5.2 million barrels on Tuesday. [API/S]
Crude prices were also supported after Iran nuclear talks missed a Tuesday deadline, relieving fears about an imminent addition of supply to the market.
"A lot of people were expecting the deal to be done overnight and Iran to be pumping a million barrels tomorrow. That's not going to be the case," said Amrita Sen, chief oil analyst at Energy Aspects.
The rebound in oil prices helped boost the S&P 500 index's energy sector, making it one of the few sectors to show gains on Wednesday. [.N]
After a decline on Tuesday, Europe's benchmark FTSEurofirst 300 recovered to finish up 0.3 percent. London's FTSE <.FTSE> rose 0.5 percent, Germany's DAX <.GDAXI> rose 0.3 percent and France's CAC <.FCHI> closed up 0.6 percent after euro zone manufacturing data was revised higher.
Equities in Greece, however, fell after Greece failed on Tuesday to reach an initial deal on reforms with its lenders. The Athex General Composite Share Price index <.ATG> finished down 1.3 percent.
(Additional reporting by Michael Connor in New York; Editing by Bernadette Baum and Leslie Adler)