* Crude falls after 4-day rally
* ADP employment falls short of expectations
* Merck down after earnings, Disney climbs
* Indexes off: Dow 0.2 pct, S&P 0.47 pct, Nasdaq 0.59 pct (Updates to market open)
By Chuck Mikolajczak
NEW YORK, Feb 4 (Reuters) - U.S. stocks lost ground in early trade on Wednesday, in the wake of a two-day rally for the S&P 500, as oil prices declined and labor market data disappointed.
The ADP National Employment Report showed private employers added 213,000 jobs in January, falling short of the median forecasts of analysts of 225,000 jobs.
Oil prices declined after a four-day rally of nearly 20 percent as a new build in U.S. crude stockpiles put a global glut back in focus. U.S. crude was down 3.3 percent to $51.32 and Brent was off 2.6 percent to $56.43. The S&P energy index lost 1.7 percent as the worst performing S&P sector.
"Oil has been the big driver. We have seen oil moving strongly since last Friday and certainly the energy sector was leading the market higher," said Peter Jankovskis, co-chief investment officer at OakBrook Investments LLC in Lisle, Illinois.
Merck shares lost 2.3 percent to $59.63 as one of the biggest drags on the Dow after the drugmaker reported slightly disappointing fourth quarter sales and predicted 2015 earnings below analyst forecasts, citing the stronger dollar.
But fellow Dow component Disney gained 5.6 percent to $99.36 after quarterly profit topped Wall Street's estimates.
The S&P 500 gained 2.8 percent over two sessions as oil prices bounced and on hopes of a Greek debt deal, although the index has been a trading range of 1,972 to 2,093 since mid-December and is nearly flat since Dec. 31. Despite the tight range, equities have been more volatile in 2015, with the daily trading range often double its average over the past year.
The Dow Jones industrial average fell 34.55 points, or 0.2 percent, to 17,631.85, the S&P 500 lost 9.54 points, or 0.47 percent, to 2,040.49 and the Nasdaq Composite dropped 27.70 points, or 0.59 percent, to 4,700.04.
Financial data firm Markit said the final reading of its Purchasing Managers Index for the service sector rose to 54.2 in January, though companies reported the weakest new business growth in more than five years.
At 10 a.m. (1500 GMT), the Institute for Supply Management will release its reading on the services sector.
Gilead Sciences shares dropped 9.9 percent to $96.61, dragging the Nasdaq lower. The drugmaker said it is offering steeper-than-expected discounts on its hepatitis C drugs to health insurers and other group payers who had complained about the price.
General Motors reported fourth-quarter earnings well above Wall Street expectations and said it plans to raise its quarterly dividend by 20 percent, sending shares up 3 percent to $35.01.
Chipotle Mexican Grill slumped 7.3 percent to $673.52. Sales growth at established restaurants slowed in the fourth quarter and slightly missed Wall Street's estimate.
NYSE declining issues outnumbered advancers 1,986 to 698, for a 2.85-to-1 ratio; on the Nasdaq, 1,440 issues fell and 717 advanced, a 2.01-to-1 ratio.
The S&P 500 posted 16 new 52-week highs and no new lows; the Nasdaq Composite recorded 21 new highs and 10 new lows. (Reporting by Chuck Mikolajczak; Editing by Chizu Nomiyama and Nick Zieminski)