(By Salman - iStockAnalyst Writer)US Stocks dropped on Wednesday as two separate economic data suggested that weakness continues to persist in US manufacturing sector and labor market. Meanwhile, US senate will be voting on revised $700 billion bailout plan late on Wednesday. The legislation will include an increase in FDIC insurance limits and tax breaks. Earlier lawmakers at House of Representatives rejected the rescue plan on Monday.

The Dow Jones Industrial Average retreated 19.59 points (-0.2%), to 10,831.07.The Standard & Poor's 500 Index slipped 3.68 points (-0.32%) to 1,161.06. Nasdaq Composite Index shed 22.48 points (-1.07%) to 2,069.40. Industrial, Technology and Energy stocks suffered the most while Financial gained in Wednesday's trade.

The Institute for Supply Management's manufacturing index fell to 43.5% in September from 49.9% in August. It was the sharpest fall for index since 1984 and the reading now stands at 7 year low. Readings below 50% in the ISM index indicate contraction in manufacturing activity. Economists were expecting a reading of 49.5%.
ADP Employer Services showed US employer cut 8,000 workers from payrolls in September. However, Wall Street was expecting a much larger figure of 53,000 job cuts.

Senate leaders from both the parties were hopeful that a revised rescue plan will be passed today. In the modified plan, federal deposit insurance is proposed to be hiked to $250,000 from $100,000. A two-year extension of tax breaks of about $149 billion for individuals and corporations over the next decade is also being included in the bill.

Meanwhile, U.S. Securities and Exchange Commission eased accounting rules on Wednesday and allowed banks to switch from mark-to-market accounting to hold-to-maturity accounting. SEC also indicated that it may extend its existing short sale ban on financial stocks, which it imposed last week. The ban was supposed to expire on Thursday night.

GE (GE) on Wednesday announced that Buffett's Berkshire Hathaway Inc. has agreed to buy $12 billion in common stock and $3 billion in preferred shares that pay an annual 10% dividend and are callable after three years at a 10% premium. Earlier shares of GE plunged as much as 10% after credit default swaps on GE hit a record high in trading. General Electric Co. also fell after Deutsche Bank cut its price target. Berkshire Hathaway Inc. (BRK-A) climbed 4.90% to $137,000. GE recovered and finished with a loss of 3.92% or $1 to $24.50.

Shares of industrial companies sank after Citigroup analyst forecasted that the current crisis will limit spending on equipments. Caterpillar Inc. (CAT) plunged 4.45% while Ingersoll-Rand Co. fell 5.49%.
Mining giant Alcoa Inc. (AA) tumbled 5.80% to close at $21.27.

Among Technology stocks, shares of iPhone maker Apple Inc. (AAPL) were down 3.99%. International Business Machines Corp. (IBM) subtracted 5.84% while Dell (DELL) dropped 2%. Cisco Systems Inc. (CSCO) and Hewlett-Packard Co. (HPQ) shed 2.7% and 2.75% respectively.

Auto stocks plunged after they released poor sales figure for September. Ford Motor Co. was down 12.50%.
Among Financial Stocks, Citigroup rose 12.14% or $2.49 to $23. Bank of America (BAC) climbed and J.P Morgan (JPM) climbed 8.9% and 6.27% respectively.

European markets settled mixed. UK FTSE closed at 4,959.59, up 57.14 points (+1.17%) from previous closing. French CAC climbed 1.17% while German DAX fell 0.42%.

Asian stocks edged higher on Wednesday. Nikkei 225 climbed 0.96% while Hang Seng Index rose 0.76%.
At NYMEX, Crude Oil for November delivery settled at $98.53, down $2.11 or 2.1% as US Crude Oil inventories gained for the first time in six weeks. Gloomy outlook for US economy also pulled down the prices.
Dollar was up against major currencies on hopes of passage of bailout plan.

Disclosure: Author does not own any of the stocks discussed here.