By Rodrigo Campos

NEW YORK (Reuters) – U.S. stocks fell on Wednesday, with losses accelerating after short-term technical indicators failed and after a gauge of industrial orders that unexpectedly fell last month.

Losses on the S&P 500 accelerated around mid-session after the benchmark dropped below a support level near 2,085. An index of biotechnology shares <.NBI> dropped sharply and is on track to close below its 14-day average for the first time since Feb. 11.

“The S&P was trying to hold just below 2,090 but failed; maybe it’s not much more than technical levels traders are playing with right now,” said Jim Paulsen, chief investment officer at Wells Capital Management in Minneapolis.

“Technicals take over on this market just being unable to break away on the upside.”

An earlier government report showing a drop in durable goods orders pushed the dollar index lower <.DXY>, giving initial support to equities as it eases fears that the rally in the U.S. currency will hurt corporate earnings. However, with valuations stretched as stock indexes trade near record highs, weak economic data is not welcome.

“The dollar strength can sap earnings growth, but if you continue to see soft economic data here, a confirmation of decelerating growth, that will certainly affect the market,” said Chad Morganlander, portfolio manager at Stifel, Nicolaus & Co in Florham Park, New Jersey.

At 12:30 p.m. EDT (1630 GMT) the Dow Jones industrial average <.DJI> fell 192.64 points, or 1.07 percent, to 17,818.5, the S&P 500 <.SPX> lost 17.56 points, or 0.84 percent, to 2,073.94 and the Nasdaq Composite <.IXIC> dropped 79.68 points, or 1.6 percent, to 4,915.05.

The Nasdaq underperformed due to declines in biotechnology and semiconductor stocks. The Nasdaq Biotech index <.NBI> fell 3.1 percent, dropping almost 6 percent this week so far, after a string of six consecutive weekly gains totaling more than 16 percent. An index of chipmakers <.SOX> fell 3.5 percent on the day.

Kraft Foods <KRFT.O> jumped 38.4 percent to $ 84.86 after a merger agreement with ketchup maker H.J. Heinz Co, owned by 3G Capital and Berkshire Hathaway <BRKb.N>. Kraft Heinz Co will trade publicly and will be the third-largest food company in North America.

Kofax Ltd <KFX.O> rallied 46 percent to $ 10.93 after Lexmark International <LXK.N>, known for its printers, said it would buy Kofax in a deal of about $ 1 billion that would double the size of its enterprise software business. Lexmark shares jumped 7.9 percent to $ 44.

Declining issues outnumbered advancing ones on the NYSE by 1,965 to 972, for a 2.02-to-1 ratio on the downside; on the Nasdaq, 2,010 issues fell and 603 advanced for a 3.33-to-1 ratio favoring decliners.

The benchmark S&P 500 index was posting 11 new 52-week highs and 1 new lows; the Nasdaq Composite was recording 57 new highs and 23 new lows.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama and Nick Zieminski)