Stocks Kick Off Second Half With Win

Updated with closing Treasuries and stock prices.

The major indices in New York closed modestly higher but off their highs of the session Wednesday as investors greeted a new quarter and a whirlwind of economic data ahead of the government's June employment report.

The Dow Jones Industrial Average added 57.06 points, or 0.7%, to 8504.06, while the S&P 500 climbed 4.01 points, or 0.4%, to 923.33. The Nasdaq Composite tacked on 10.68 points, or 0.6%, to 1845.72.

Kraft(KFT Quote) was the leading percentage gainer on the Dow, rising 5% to $26.61 after Cheerios maker General Mills(GIS Quote) reported a 94% earnings increase with some help from a large mark-to-market valuation gain and a lower tax rate.

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Also, Intel(INTC Quote) advanced 3% to $17.04, after Morgan Stanley upped its estimates for both the chipmaker and Microsoft(MSFT Quote).

The major indices closed out the second quarter with double-digit gains that marked the best quarterly improvement in years. Nonetheless, Tuesday's session -- the last for the quarter and June -- ended on a dim note with stocks unable to recover from an unexpected drop in consumer confidence.

While Street watchers are anxiously guessing where the market is heading after a recent pullback stunted a multiweek rally. Jeff Saut, chief investment strategist at Raymond James, says it may be a mistake to get too bearish.

"The recession that we've been in since '07 has been an anomaly, and in that productivity actually increased, and increased rather dramatically, in the recession, implying that companies cut costs left, right and center," he says. This "leads to the thought that if final demand picks up -- and I think you're starting to see hints of that -- that the earnings rebound could be stronger than people think."

Automakers were in focus Wednesday afternoon as they aired their June sales. Ford (F Quote) said its sales fell 11% in June, its smallest decline for the year. Chrysler, meanwhile, reported a 42% decline, Toyota(TM Quote) a 32% drop and Nissan(NSANY Quote) a 23% fall.

Ford shares fell 2.6%, nonetheless, while Toyota edged down 0.3%, and Nissan ticked up 0.6%.

The new quarter kicked off with a new round of economic data. First, ADP estimated that there were 473,000 jobs lost in the private sector in June, far more than expectations for 394,000. However, job losses were down from a downwardly revised 485,000 in May and also marked the least number of estimated jobs lost since October 2008. ADP's report comes ahead of the government's unemployment data -- which is expected to show unemployment rose to 9.6% -- on Thursday.

Helping to offset the greater-than-expected June private sector job-loss figure, global outplacement consultancy Challenger, Gray & Christmas reported that planned layoffs at U.S. firms fell 33% in June from May, marking the fifth consecutive month planned headcount reductions have declined.

Meanwhile, the National Association of Realtors said pending home sales increased slightly more than expected in May, by 0.1%, after an upwardly revised 7.1% increase the month prior.

Also, the Institute for Supply Management said its manufacturing index rose roughly in line with expectations to 44.8 in June from 42.8 the month prior, although any figure less than 50 still represents a contraction.

Crude oil futures fell off earlier gains, ultimately losing 58 cents, to settle at $69.31 a barrel, after the Energy Department's Energy Information Administration reported that gasoline and distillate inventories increased more than expected last week. That overshadowed a report by The American Petroleum Institute late Tuesday that said U.S. crude inventories dropped by 6.8 million barrels last week, helping crude oil futures to rebound early Wednesday, gaining more than $1.50 before it moved into negative territory.

Gold rose $13.90 to $941.30 an ounce.

A reminder that tough economic realities still exist, newspaper publisher Gannett (GCI Quote) plans to cut between 1,000 to 2,000 jobs as revenue continues to decline, The Wall Street Journal reports. Shares rose 2.5% to $3.66 Wednesday.

Elsewhere, Nomura Holdings (NMR Quote) will pay 19 billion yen ($197 million) for Citigroup's(C Quote) Japanese trust banking subsidiary NikkoCiti Trust and Banking Corp., in a deal expected to close in the fourth quarter.

Nomura shares rose 0.2%, while Citigroup gave up 0.3%.

Building on an existing alliance, Morgan Stanley(MS Quote) and Mitsubishi UFJ (MTU Quote) announced a loan marketing joint venture and other initiatives to create "attractive credit opportunities for both firms and provide clients in the U.S., Canada and Latin America." Morgan Stanley edged down 0.5%, while Mitsubishi UFJ added 2.4%.

Stocks overseas were mixed. In Europe, London's FTSE 100 and the DAX in Frankfurt were rising 2.2% and 2%, respectively. In Asia, the Nikkei in Japan closed down by 0.2%.

Longer-dated Treasuries also were falling in price, rising in yield. The 10-year was losing 2/32 to yield 3.54%, while the 30-year was falling 4/32 to yield 4.34%.