July 5, 2012 / 2:38 PM / 7 years ago

US STOCKS-Wall St drops after data, central bank moves

* U.S. service sector slows to 2-1/2-yr low in June-ISM

* ECB cuts rates by 25 bps, deposit rate at zero

* Stocks down: Dow 0.7 pct, S&P 0.8 pct, Nasdaq 0.6 pct (Adds service sector data, updates trading)

By Angela Moon

NEW YORK, July 5 (Reuters) - U.S. stocks fell on Thursday, after gaining during its three previous sessions, as investors digested a slew of economic data and moves by global central banks.

Energy stocks were the day’s top decliners. U.S. markets were closed for Independence Day on Wednesday, but stocks had climbed in the previous three sessions as sharp gains in oil prices lifted energy shares. The S&P 500 energy sector index was down 0.9 percent on Thursday.

Data showed the pace of growth in the U.S. services sector in June was at its slowest since January 2010 as new orders waned.

Other data earlier showed U.S. private employers added 176,000 jobs in June, beating economists’ expectations while the number of Americans filing new claims for unemployment benefits last week fell by the most in two months.

The Dow Jones industrial average was down 85.94 points, or 0.66 percent, at 12,857.88. The Standard & Poor’s 500 Index was down 10.43 points, or 0.76 percent, at 1,363.59. The Nasdaq Composite Index was down 16.93 points, or 0.57 percent, at 2,959.15.

China’s central bank cut interest rates for the second time in two months on Thursday, in the latest attempt to bolster slowing growth in the world’s second-largest economy. Benchmark lending rates will be cut by 31 basis points to 6 percent, and deposit rates will be reduced by 25 basis points to 3 percent.

Market reaction to further monetary stimulus from the European Central Bank and the Bank of England was muted.

As expected, the ECB cut its main interest rate to a record low of 0.75 percent and its deposit rate to zero, while the BoE launched a third round of monetary stimulus, saying it would make 50 billion pounds of asset purchases with newly created money to help lift the economy out of recession.

“If we get a couple of more bad jobs reports, it will come in with more (Fed) stimulus. Today’s reports suggest they might hold off, but they will want to see more data before they decide,” said John Canally, investment strategist at LPL Financial in Boston.

Trading was expected to be light and volatile.

“It is a very light day, many people are out. I would expect movements to be exaggerated because of the lack of liquidity,” said Rick Meckler, president of hedge fund LibertyView Capital Management LLC in Jersey City, New Jersey.

Stubbornly high unemployment and anxiety about a sluggish economy took their toll on top U.S. retailers’ sales in June as shoppers curtailed spending.

Costco Wholesale Corp, Macy’s Inc, Kohl’s Corp and Target Corp were among the chains that reported disappointing June sales at stores open at least a year. Costco shares were down 0.5 percent at $93.93 and Target shares fell 1.6 percent to $56.88. (Editing by Bernadette Baum)

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