Job Growth Won't Stop Cut

Recession calls may be folding, but rate cuts remain in the game.

Wednesday's economic data threw into question some market participants' gripping fear that the U.S. economy is headed for a recession. But it didn't throw traders off the trail of a fed funds rate cut come Dec. 11, when the Federal Open Market Committee meets.

The combination helped edge stocks higher, despite more angst in the credit markets, including a ratings agency warning that bond insurer MBIA(MBI) may be more likely to face a capital shortfall.

A collection of employment data and reports on productivity, factory orders and the general states of the service and manufacturing segments of the economy for November conspired Wednesday to buoy optimism that the economic slowdown under way may slide through without sparking a full-blown recession.

The key piece of data was the ADP National Employment report, which revealed that the private sector added 189,000 new jobs to the economy in November. The Dow Jones Industrial Average responded by finishing more than 196 points higher to 13,444.96.

The report surprised the market, which had set expectations at about 50,000 new jobs added. It is also causing some economists to rethink their expectations for Friday's nonfarm payrolls report. The consensus expectation of analysts is that the Bureau of Labor Statistics will report just 70,000 new jobs added in November, including private sector and government jobs.