Wall Street edges lower after service sector data?

JeeYeon Park , CNBC ? ? ? 48 min.

Stocks finished sharply lower Wednesday, with the S&P 500 and Nasdaq falling 1 percent each, amid building worries over North Korea and after San Francisco Federal Reserve Bank President John Williams said the central bank could begin to taper purchases this summer if the economy continues to improve.

Williams pegged growth at 2.5 percent in 2013 and 3.5 percent in 2014.

The Dow Jones Industrial Average dropped more than 100 points, led by Bank of America and JPMorgan, after hitting fresh intraday and closing highs in the previous session.

The S&P 500 and the Nasdaq declined 1 percent each. If the S&P 500 closes lower, it will have alternated between gains and losses for the 10th consecutive session. The last time the index saw such a pattern was in April 2002.

The CBOE Volatility Index (VIX), widely considered the best gauge of fear in the market, jumped near 14.

All key S&P sectors were in negative territory, led by financials and energy.

(Read More: Retail Investors Are Back! But Don't Hit 'Sell' Just Yet)

U.S. Defense Secretary Chuck Hagel said the U.S. sees a "real and clear" danger from North Korea. The U.S. is preparing to deploy an advanced missile defense system to Guam to defend American military bases in the Pacific.

"We are doing everything we can, working with the Chinese, others, to defuse that situation on the peninsula," said Hagel.

(Read More: North Korea Takes Out Anger on $2 Billion Factory Zone)

"Coming into the year, there were some uncertainties, but I feel very confident that the S&P 500 is going to finish this year in the 1,575 to 1,625 area," said Scott Wren, senior equity strategist at Wells Fargo Advisors. "There's going to be a pullback this year, but this is very minor and any pullback is an opportunity. I'd love to see a 5 to 8 percent pullback but I don't think this is it."

Oil prices plunged nearly 3 percent to settle at $94.45 a barrel, logging its biggest one-day decline since November. Energy companies including Phillips 66, Tesoro and Marathon Petroleum were among the top laggards on the S&P 500.

European markets were lower as Italy's political impasse continues and President Giorgio Napolitano's team of "wise men" attempted to formulate reform measures that can gain cross-party consensus.

(Read More: Italy's Bersani Drops Leadership Bid)

Vodafone slumped after Verizon Communicationsdenied earlier reports that it is looking to partner with AT&T to acquire British cellphone company Vodafone. However, the Dow component said it would be a willing buyer of Vodafone's current 45-percent share of Verizon's wireless venture.

Zynga soared after the social gaming company said it would begin offering real-money poker and casino-style games in the UK in the next few days.

Among earnings, ConAgra declined after the packaged foods company reported a 57 percent drop in earnings, hurt by costs related to its acquisition of Ralcorp.

Meanwhile, Monsanto gained after the seed company boosted its full-year profit guidance after reporting better-than-expected quarterly results thanks to strength in its global corn business.

On the economic front, the rate of growth in the services sector slowed in March to the lowest level since August. The Institute for Supply Management said its services index fell to 54.4 last month from 56 in February, falling short of economists' forecasts for 55.8. A reading above 50 indicates a sector expansion.

U.S. private employers added 158,000 jobs in March, falling short of economists' expectations for a gain of 200,000, according to payrolls processor ADP. February's private payrolls figure was revised up to an increase of 237,000 from the previously reported 198,000.

The ADP report comes ahead of the widely-followed government non-farm payrolls report, due Friday. Economists expect to see a gain of 200,000, with the unemployment rate steady at 7.7 percent, according to a Reuters poll.

(Read More:Teen Summer Jobs Forecast: Sunnier, Chance of Clouds)

Earlier, the Mortgage Bankers Association reported that home loan applications dipped 4 percent last week due mainly to a decline in refinancing.

Meanwhile, the Nikkei 225 surged 3 percent on hopes that aggressive monetary stimulus measures will be announced at the Bank of Japan's policy meeting on Thursday. Central bank governor Haruhiko Kuroda is expected to substantially boost asset purchases,as well as buy longer-dated government bonds and commit to the open-ended purchase of assets.

?By CNBC's JeeYeon Park (Follow JeeYeon on Twitter: @JeeYeonParkCNBC)

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