Investing.com-- U.S. stocks retreated Wednesday after stronger than expected employment data raised concerns over the pace of future interest rate cuts.
At 09:40 ET (14:40 GMT), the Dow Jones Industrial Average fell 80 points, or 0.2%, the S&P 500 index dropped 12 points, or 0.2%, and the NASDAQ Composite slipped 60 points, or 0.3%.
Strong employment data
The number of Americans filing for first-time unemployment benefits unexpectedly edged down last week, touching the lowest level since February, in a sign of strength in the labor market.
Initial claims for state jobless aid slipped to 201,000 during the week ended on January 4, while the four-week moving average, which aims to account for volatility in the weekly returns, decreased to 213,000. It had previously stood at 223,250.
Elsewhere, private payrolls increased by 122,000 jobs last month, after advancing by 146,000 in November, the ADP National Employment Report showed.
A raft of economic figures earlier this week also pointed to an unexpected increase in job openings and sticky inflation. Taken together, the readings -- which come ahead of the all-important monthly US employment report later this week -- bolstered bets that the Federal Reserve will not be in a rush to roll out further possible interest rate reductions in 2025.
Investors will also be keeping tabs on a speech from Fed Governor Christopher Waller on Wednesday, as well as minutes from the rate-setting Federal Open Market Committee's latest meeting, for any more indications on the central bank's policy trajectory.
Exxon Mobil flags hit to earnings
In the corporate sector, Exxon Mobil (NYSE: XOM ) fell 1.3% after the oil major warned that a decline in oil refining profits, along with weak returns from across its operations, would dent its fourth-quarter income by around $1.75 billion versus the prior three-month period.
London-based rival Shell (NYSE: SHEL ) stock fell 3% after it flagged that it will book a charge of $1.3 billion in the fourth quarter related to permits in Germany and the US. It added in an update that earnings from its integrated gas division will also be "significantly lower" than the third quarter.
Crude edges higher
Oil prices edged higher Wednesday, extending a bounce from the prior session as US industry data pointed to a drop in oil inventories, while production by OPEC countries was seen falling.
By 9:40 ET, the US crude futures (WTI) climbed 0.2% to $74.41 a barrel, while the Brent contract rose 0.2% to $77.22 per barrel. Both contracts were close to their highest levels since mid-October.
Data from the American Petroleum Institute , released on Tuesday, showed that oil inventories in the US -- the world's top crude consumer -- shrank by more than 4 million barrels in the week to January 3, substantially more than expectations for a draw of 250,000 barrels.
If confirmed by upcoming official data, it would be the second straight week of draws for inventories, reflecting increased travel during the year-end holiday season.
Additionally, data from Reuters showed oil production by countries in the Organization of the Petroleum Exporting Countries decreased in December, with maintenance activity in the United Arab Emirates offsetting an output hike in Nigeria.
(Ambar Warrick contributed to this article.)