Stocks Lift on Private Sector Job Growth

Stocks rose Wednesday after ADP's July employment report showed an additional 42,000 payrolls in the private sector. Demand for services was also better than expected. Gregg Greenberg has The Real Story.
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NEW YORK (

TheStreet

) -- A better-than-expected pickup in private sector hiring gave investors the confidence to send stocks higher Wednesday, and the major market averages also received help from improved service sector demand.

The

Dow Jones Industrial Average

finished 44 points higher, or 0.4%, to 10,680. The

S&P 500

gained 7 points, or 0.6%, at 1127, and the

Nasdaq

added 20 points, or 0.9%, to 2304.

Automatic Data Processing

said the

private sector added 42,000 jobs to payrolls in July, which was much better than the additional 25,000 jobs that economists had been expecting, according to Briefing.com. July's level compares to June's increase of 19,000, which was upwardly revised from an initially reported increase of 13,000.

The modest increase in the ADP report serves as a prelude to Friday's more comprehensive jobs report from the Labor Department. Early projections indicate that nonfarm payrolls likely shed 87,000 positions in July, though employers are expected to add about 82,500 jobs to private payrolls. The nation's unemployment rate is also expected to edge up a tenth of a percentage point to 9.6%.

"The ADP number was really the biggest today. It turned futures around because jobs have really been the biggest concern," said Brian Lazorishak, portfolio manager at Chase Investment Counsel, who said that the ADP report generally correlates fairly well with the direction of nonfarm payrolls. He also cautioned that there's a lot of noise surrounding Census hiring.

Lazorishak has been focused on earnings, which he deemed as strong overall."There was a little bit of weakness in consumer staples, such as with

Procter & Gamble

(PG) - Get Report

yesterday, which has been a source of pressure on the market," he said. "Consumers are still very dollar-conscious and

are watching their budgets, so I think that's impacting consumer staples companies on the pricing front."

Overseas Wednesday, Hong Kong's Hang Seng climbed 0.4% while Japan's Nikkei fell 2.1%. The FTSE in London slipped 0.2%, while the DAX in Frankfurt gained 0.4%.

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The Economy

Demand for services strengthened in July, according to the

Institute for Supply Management's nonmanufacturing index, which rose to 54.3 from 53.8 in June. Economists had been anticipating a decline to 53, according to Briefing.com.

The Energy Information Administration said crude oil inventories fell by 2.8 million barrels last week, which outpaced the drawdown of 1.2 million barrels that analysts polled by Platts had forecast. The decline was also much larger than the 776,000-barrel drop reported by the American Petroleum Institute late Tuesday. Meanwhile, gasoline and distillate supplies rose by 700,000 barrels and 2.2 million barrels, respectively. Analysts had expected gasoline stocks to shed 870,000 barrels, while distillates were expected to have added 1.16 million barrels.

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Company News

DuPont

(DD) - Get Report

,

Walt Disney

(DIS) - Get Report

and

Kraft Foods

(KFT)

topped the Dow, while

Microsoft

(MSFT) - Get Report

,

Hewlett-Packard

(HPQ) - Get Report

and

American Express

(AXP) - Get Report

were its biggest laggards.

Shares of

Sirius XM Radio

(SIRI) - Get Report

gained nearly 5% after it met analysts' profit expectations and topped revenue forecasts for $691.4 million with sales that rose 16% to $699.7 million.

Transocean showed the energy sector's strongest gains, with shares up over 6% ahead of its second-quarter earnings report, which came out after the close of Wednesday's trading session. Analysts, who were looking for a profit of $1.68 a share, were instead greeted with reported earnings of $2.22. But revenues fell short of estimates.

Media giant

News Corp

(NWS) - Get Report

also reported after the bell, saying it swung to a profit and bested bottom-line estimates in the fourth quarter thanks, in part, to improving income at its television and cable network segments.

Elsewhere in the energy space, shares of

Anadarko Petroleum

(APC) - Get Report

rose 4.3% after reporting earnings late Tuesday, highlighting

an upbeat production outlook for the year.

Devon Energy

(DVN) - Get Report

stock also rose higher after the natural gas firm beat forecasts in the morning, reporting second-quarter earnings of $1.53 a share.

AOL

(AOL)

recorded a second-quarter loss of nearly $1.1 billion on a goodwill impairment charge and weak advertising revenue.

Homebuilder

Pulte Group

(PHM) - Get Report

swung to a second-quarter profit of 20 cents a share after posting a loss of 74 cents a share a year ago. Sales rose to $1.31 billion from $678.6 million last year. Analysts' target, which typically excludes special items, had been for a loss of a penny a share on sales of $1.24 billion.

Time Warner

(TWX)

topped expectations with adjusted earnings of 50 cents a share on sales of $6.4 billion and increased its year-end guidance.

Toyota

(TM) - Get Report

swung to a profit in the first quarter and raised its year-end earnings guidance to 340 billion yen ($3.96 billion) from 310 billion yen ($3.61 billion), previously. The automaker reported earnings of 190.4 billion yen ($2.23 billion) compared with a year-ago loss of 77.8 billion yen. Sales, meanwhile, rose 27% during the quarter.

BP

(BP) - Get Report

said the leaking well in the Gulf of Mexico appears to have reached a static condition after the company began plugging it with heavy drilling mud on Tuesday.

Shares of

Goldman Sachs

(GS) - Get Report

gained ground today after a report from

CNBC

said it will spin off its prop trading business.

Intel

(INTC) - Get Report

settled charges with the

Federal Trade Commission

over allegations the chipmaker hampered competition.

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Commodities and the Dollar

Following the EIA report,

crude oil for September delivery finished lower by 8 cents to settle at $82.47 a barrel.

Elsewhere in commodity markets, the December gold contract settled $8.40 higher at $1,195.90 an ounce.

The dollar was trading higher against a basket of currencies, with the dollar index up by 0.4%.

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Treasuries

The benchmark 10-year Treasury was down by 14/32, lifting the yield to 2.957%.

The two-year note was lower by 2/32, strengthening the yield to 0.570%. The 30-year bond was down by 24/32, increasing the yield to 4.085%.

--Written by Melinda Peer and Sung Moss in New York

.

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Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.