U.S. stocks experienced a downward trend on Wednesday, ending lower as markets took a breather after a remarkable rally in November. The Nasdaq fell nearly half a percent, while the energy sector suffered significant losses, dragging down the overall market. The decline in stocks was attributed to concerns surrounding oversupply and weak demand in the oil market, as crude oil prices fell below $70 a barrel for the first time since early July.

The energy sector was hit particularly hard, with WTI crude oil futures (CL1:COM) retreating nearly 4%. This dip contributed to the sector's decline of over 20% in the fourth quarter, driven by record-breaking crude oil production in the U.S.

Daniel Jones, the investing group leader of Crude Value Insights, noted that after a fantastic month in November, markets are starting to move lower. He mentioned real economic data driving some of the pessimism, along with the bearish narrative of falling oil prices. Rising U.S. production, concerns over the broader economy, and uncertainty surrounding geopolitical issues and OPEC+ policies have compounded the market's pessimism.

Before the market opened, the latest employment report from ADP showed that the private sector added 103,000 jobs in November, falling short of the consensus figure of 123,000. This data is in line with a gradual cooling in the labor market, which aligns with the Federal Reserve's desire to see a moderation in employment growth. Surprisingly, the leisure and hospitality industry experienced weakness, with a loss of 7,000 jobs, resembling the challenges faced by Walmart (WMT), the largest private employer in the country. Walmart's CEO mentioned easing hiring and wage pressures, suggesting continued deflationary pressures in the upcoming year.

While the ADP data initially contributed to a positive opening on Wall Street, equities lost steam throughout the day and ended near the flatline before a late downward push. This decline follows a massive rally that pushed equities into overbought territory, prompting investors to take a breather.

Treasury yields demonstrated mixed movements, with longer-end maturities falling as traders sought bonds in hopes of a soft landing. The 30-year yield (US30Y) dropped by 8 basis points to 4.22%, while the 10-year yield (US10Y) decreased by 5 basis points to 4.12%. Meanwhile, the more rate-sensitive 2-year yield (US2Y) increased by 2 basis points to 4.60%.

In addition, the U.S. trade deficit widened for the second consecutive month in October, driven by a decline in exports and a slight increase in imports. This economic data adds further pressure on the market.

British American Tobacco (BTI) faced significant losses as its U.S.-listed shares fell nearly 9%. The company wrote down $31.5 billion in value for some of its U.S. brands, contributing to investor concerns.

Overall, the U.S. stock market experienced a decline as energy stocks faltered due to falling oil prices. Traders and investors will closely monitor further economic data and oil market developments to gauge the market's direction in the coming weeks.