The major stock indexes opened lower after pre-session data indicated the labor market had suffered major losses in May. The selling continued after the 10 am testimony from Federal Chairman Ben Bernanke, who said the growing fiscal debt couldn’t be ignored and that recovery from the recession could be slow.

Roughly two hours into the Wednesday session, the S&P 500 has fallen 1.17% to 933, while the Dow had lost 0.79% to 8762, and the Nasdaq has shed 0.57% to 1826. 

Before markets opened, the ADP employment survey reported a monthly drop of 532,000 private jobs in May. The decline was bigger than expected and is consistent with a drop of 470,000 lost jobs in the government’s Nonfarm Payrolls report to be released Friday. 

The losses were almost equally split between the goods and service sectors. 

At 10 am, Ben Bernanke gave a pretty dour reading of the economy. He said once recovery begins late this year, the economy “will only gradually gain momentum” and it could take some time for unemployment to fall. 

The Fed chairman also said the deepening fiscal debt would reach its highest debt-to-GDP level since just after World War II. “Unless we demonstrate a strong commitment to fiscal sustainability in the longer term, we will have neither financial stability nor healthy economic growth,” he said to the House Budget Committee.

Just as the Bernanke testimony was released, the ISM Non-Manufacturing Index indicated continued slowdown across the services, construction, and financial industries. 

The survey moved up a minor 0.3 points in May, but the 44.0 level is still well below the growth threshold.  Only 6 of the 17 industries surveyed reported growth compared to April.

“This report confirms that pulling out of the adverse state of downward pressure on activity, output and employment remains a formidable challenge,” said Brian Bethune from IHS Global Insight. 

Echoing the morning testimony from Bernanke, he added: “We should not expect a smooth ascent for the economy back up to the surface.”