Stocks Move Higher on Encouraging Hiring News
Stocks edged higher on Wall Street Wednesday as encouraging news about the U.S. job market offset a mix of worrying developments across the globe.
The threat of a re-emerging European debt crisis and rising oil prices weighed on stocks in early trading. That news was offset though by a brighter outlook on jobs before Friday's monthly employment report. Stocks drifted higher throughout the morning and turned positive shortly before noon.
Traders dumped Portuguese stocks and bonds as the country's government teetered on the edge of collapse. Oil climbed above $102 a barrel for the first time in more than a year as the political crisis in Egypt intensified, raising the risk of supply disruptions in the Suez Canal.
In the U.S., fewer people sought unemployment benefits last week and ADP, a payrolls processor, said businesses added more jobs last month than analysts had expected. The government's broader monthly survey of U.S. employment is scheduled to be released Friday morning. Economists predict that employers added 165,000 jobs in June.
"The ADP was so positive that it should give some hope for Friday's employment report," said JJ Kinahan, Chief Derivatives Strategist at TD Ameritrade.
Investors will be watching the report closely in hopes of figuring out what the Federal Reserve will do next.
Fed chairman Ben Bernanke said June 19 that the central bank was considering easing back on its stimulus program later this year if the economy strengthens enough. The central bank is buying $85 billion in bonds every month to keep interest rates low and encourage spending.
The Dow Jones industrial average was up 87 points, or 0.6 percent, to 15,020 as of 12:24 p.m. Eastern Daylight Time. The Standard & Poor's 500 rose three points, or 0.2 percent, to 1,616. The Nasdaq composite gained 16 points, or 0.5 percent, to 3,499.
In Europe, stock markets slumped after the yield on Portugal's benchmark 10-year bond surged almost a percentage point to 7.31 percent. Investors are worried about the future of the bailed-out country and its efforts to get a handle on its debt after two Cabinet members quit the government.
Germany's DAX index fell 1 percent to 7,829 and the U.K.'s FTSE 100 fell 1.2 percent to 6,229.
"Overseas news has certainly played a role in U.S. market opening on the weak side this morning," said Michael Sheldon, chief market strategist at RDM Financial Group. "You have political unrest in Egypt, which has helped propel oil prices back above $100. We're also starting to see a re-emergence of political risk in Europe, which is stirring the pot."
The bad news from overseas was offset by some encouraging news on U.S. hiring.
Payroll processing firm ADP said that U.S. employers added 188,000 jobs in June, more than the 155,000 forecast by economists. The government's weekly jobless claims report provided evidence that layoffs remain low and job gains steady. The number of Americans seeking unemployment benefits fell 5,000 to 343,000, the Labor Department said.
In U.S. government bond trading, the yield on the 10-year Treasury note was unchanged at 2.48 percent from Tuesday.
The price of oil climbed $1.65, or 1.6 percent, to $101.26. Oil has climbed almost 8 percent since Monday last week. The price of gold rose $9.50, or 0.8 percent, to $1,253.30.
The New York stock exchange will close at 1 p.m. Wednesday before the July 4 holiday. It will reopen on Friday. The dollar rose against the euro and fell against the Japanese yen.
Among stocks making big moves;
— Alcoa fell 9 cents, or 1.2 percent, to $7.72 after the Citigroup analyst Brian Yu reduced his second-quarter and full-year profit predictions for the aluminum producer, citing low prices for the metal.
— AutoNation gained $1.01, or 2.3 percent, to $45.59 after Credit Suisse raised its rating on the stock to "outperform" from "neutral," citing a positive outlook for the company's parts and servicing business.
—Mead Johnson fell $7.79, or 10.4 percent, to $67.10 adding to a 5.7 percent slump Tuesday. The Chinese government is investigating the nutritional products maker for possibly violating anti-monopoly laws in its pricing of infant formula, Bloomberg News reported yesterday.
Copyright 2013 The Associated Press.