Closing Update: U.S. Stocks Scale Back Losses As Investors Shrug-Off ADP Report; Look To Friday's Monthly Payrolls Data

4:10 PM, May 2, 2012 -- U.S. stocks steadied in afternoon trading and were headed for a modestly lower close following their morning plunge on the back of a disappointing ADP payrolls report. Causing the stabilization was the sentiment that the ADP report may not be an indication of the total monthly payrolls data, set for release on Friday.

Private-sector employment increased 119,000 in April, the lowest total since September, the payrolls-processor company Automatic Data Processing said. The best hiring was seen in the service sector and among small and medium businesses, according to ADP, which revised its March figures to a gain of 201,000 jobs from a prior estimate of 209,000. Experts in a Bloomberg survey, on average, had been expecting 179,000 new jobs for April.

Also, U.S. factory orders dropped 1.5% in March, the biggest decline in three years, the Commerce Department said. Experts surveyed by MarketWatch had expected orders to fall 1.6%. February orders were trimmed to a revised 1.1% in February, down from a prior estimate of 1.3% growth. Orders for products meant to last at least three years slid 4% in March. Orders for nondurable goods rose 0.5%.

Earlier, a measure of business conditions for Chinese manufacturers improved further during April although overall activity still declined. The monthly manufacturing Purchasing Managers' Index rose to a final 49.3 reading, up from a preliminary "flash" reading of 49.1 and a full point better than March's 48.3 reading. But the measure stayed below the threshold of 50, indicating a contraction from the previous month.

Investors are holding out hope for the official payroll report which is due this Friday, with analysts quick to point out that, historically, the ADP report hasn't offered accurate predictions of the official report.

In company news, Shares of Arena Pharmaceuticals (ARNA) rallied after the company said in a release late yesterday that the US Food and Drug Administration (FDA) notified it that an Endocrinologic and Metabolic Drugs Advisory Committee meeting to discuss the lorcaserin New Drug Application (NDA) resubmission is scheduled on May 10. Lorcaserin is the company's anti-obesity drug. In the same release, the company posted a Q1 loss per share of $0.18 on revenue of $2.19 million. The Street was expecting a loss per share of $0.12 on revenue of $2.65 million.

Web.com Group (WWWW) surged and set a new 52-week high of $16.43. The company posted Q1 earnings of $0.35 per share, ex one-time items, versus the Capital IQ consensus of $0.31. Revenues were $119.3 mln, versus the analysts' estimate of $111.16 mln.In the same period last year, the company reported EPS of $0.21 on revenues of $45.1 mln.

A German court ruled that Microsoft (MSFT) infringed Motorola Mobility's (MMI) patents and ordered Microsoft to remove its popular Xbox 360 gaming consoles and Windows 7 operating system software from the German market. MSFT said the ruling does not mean that its products would be taken off retailers' shelves, however, saying it previously received a preliminary injunction in a U.S. district court preventing the phone maker from enforcing any German court order.

Commodities were lower. Crude-oil futures ended lower, dragged by a the sixth consecutive increase in U.S. crude inventories. Crude for June delivery fell 94 cents, or 0.9%, to end at $105.22 a barrel on the New York Mercantile Exchange. Gold futures forJune delivery lost $8.40, or 0.5%, at $1,654 an ounce on the Comex division of the New York Mercantile Exchange.

Here's where the U.S. markets stood at end-of-day:

Dow Jones Industrial Average down 10.75 (-0.08%) to 13,268.57

S&P 500 down 3.51 (-0.25%) to 1,402.31

NASDAQ Composite Index up 9.41 (+0.31%) to 3,059.85

GLOBAL SENTIMENT

Nikkei 225 up 0.31%

Hang Seng Index up 1.02%

China Shanghai Composite Index down 1.76%

FTSE 100 down 0.93%

UPSIDE MOVERS

(+) TRIP, Reports adjusted Q1 EPS of $0.39; analysts expected a $0.33 a share gain.

(+) PEP, Raises quarterly dividend 4% to $2.15 a share.

(+) ENR, Fiscal Q2 adjusted profit was $1.22 a share vs. $1.06 in Street view.

(+) STRI, Q1 EPS Above Estimates.

DOWNSIDE MOVERS

(-) CLX, Fiscal Q3 earnings fall 13% despite 6% increase in sales.

(-) PEET, Q1 profits fall 39% to $0.25 a share; analysts expected $0.31 a share.

(-) TWC, Net income falls 11% but adjusted EPS of $0.67 beats by a penny.

(-) UBNT, Earnings Above Consensus, Forecast In-Line.