Dow Snaps Out of Funk

NEW YORK (TheStreet) -- Stocks caught a late bounce on Wednesday as recent selling pressure finally relented despite ongoing worries about the possibility of a double-dip recession.

The Dow finished up 30 points, or 0.3%, at 11,897 after touching an intraday low of 11,720. The gain allowed the blue-chip index to avoid a ninth straight negative session, a streak that hasn't occurred since 1978.

The S&P 500 inched up 6 points, or 0.5%, to 1260 to return to positive territory for 2011, while the Nasdaq climbed 25 points, or 0.9%, to 2694.

Stocks initially sold off sharply after activity across the services sector unexpectedly slumped, according to the Institute for Supply Management's non-manufacturing index. The index fell to 52.7, missing expectations for a reading of 53.7, after June's level of 53.3.

Also, a reading on new jobs in the private sector in July suggested that the employment outlook was still gloomy. Companies added 114,000 jobs in July, according to Automatic Data Processing. The gain was slightly above consensus estimate for a 100,000 increase, but came short of June's revised increase of 145,000.

Investors are expecting a lackluster July employment report from the federal government on Friday, with the unemployment rate is expected to sit tight at 9.2%. The market is projecting 84,000 additional nonfarm payrolls in July, after June's meager increase of 18,000 jobs.

"Confidence is improving a little, but keep in mind that a lot of folks now are 'stuckholders,' and they are looking for exits if they can escape with minimal damage. That is what overhead resistance is all about, and we have plenty of it," said RealMoney contributor Rev Shark in a recent blog post.

Breadth within the Dow was positive with 21 of the index's 30 components moving higher led by Coca-Cola (KO), General Electric (GE), Intel (INTC), and Walt Disney (DIS). AT&T (T), Verizon (VZ), and 3M (MMM) all also rose more than 1%.

Dow laggards included Caterpillar (CAT), Chevron (CVX), and Wal-Mart StoresCaterpillar (WMT).

About 5.7 billion shares trading on the New York Stock Exchange, while some 2.5 billion stocks changed hands on the Nasdaq with advancers outpacing decliners on both exchanges, 1743 to 1262 on the Big Board and 1519 to 1034 on the Nasdaq.

Investors remain skeptical about struggling European countries' abilities to pay down debts. On Wednesday, the cost of insuring against an Italian default hit a new high of 360 basis points. Yields on Italy's benchmark 10-year bonds touched euro-era highs of 6.1% yesterday.

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