Stocks Hold Gains as Strong Data Offsets HP

NEW YORK (TheStreet) -- U.S. stocks finished with mild gains Wednesday as better-than-expected services sector and payrolls data offset a sharp decline in Dow component Hewlett-Packard (HPQ).

The Dow Jones Industrial Average rose more than 12 points, or 0.09%, to finish at 13,495. The blue-chip index, which briefly dipped below the flat line in the final hour, has now risen in two of the past three sessions and is up 10.45% so far in 2012.

Breadth was positive with winners outpacing losers, 21 to 9. The top percentage gainers were Bank of America ( BAC), Home Depot ( HD), and Walt Disney ( DIS).

HP was by far the biggest loser in the Dow, falling nearly 13% as CEO Meg Whitman, at a her first analyst meeting Wednesday since taking over at the helm in September 2011, warned that earnings are expected to weaken in 2013 before her efforts at improving the company begin to kick in.

Other blue-chip decliners included Alcoa ( AA), Chevron ( CVX), and Intel ( INTC).

The S&P 500 gained more than 5 points, or 0.36%, to settle at 1451, while the Nasdaq rose in excess of 15 points, or 0.49%, to close at 3135.

The strongest sectors in the broad market were transportation, services and financials. Energy and basic materials finished in the red.

Volume totaled 3.52 billion on the New York Stock Exchange and 1.70 billion on the Nasdaq. Breadth was even on the Big Board while losers ran slightly ahead of winners on the Nasdaq.

Investors got some welcome economic news early as the Institute for Supply Management said that its headline services index pointed to yet another and faster month of sector expansion in September, with the number coming in at 55.1 in September, which was 1.4 points higher than the 53.7 registered in August. It's the best number since March, and better than the 53 level economists were expecting.

"This is unquestionably positive especially for those worried the U.S. may have fallen into recession," according to a note from BTIG Economics.

Most of the sub-index components of the report showed improvement. However, the employment sub-index in the report decreased by 2.7 points to 51.1, indicating growth in employment for the second straight month but at a slower rate.

Meantime, the ADP private sector employment change report showed a rise in private payrolls in September of 162,000, down from a downwardly revised 189,000 increase in August, but ahead of the consensus view. Economists, on average, were forecasting a private payrolls increase in September of 133,000.

The FTSE 100 in London settled up 0.28% and the DAX in Germany closed up 0.22% on Wednesday. The Nikkei Average in Japan closed down 0.45% and the Hang Seng in Hong Kong finished up 0.23%.

The European and Asian markets were under some pressure following data indicating that China's services sector softened markedly in September to its lowest level since November 2010, and numbers showing a deepening decline in eurozone business activity in September, which was pointing to a recession.

Eurozone retail sales inched up at a weak pace in August in the face of elevated oil prices and deepening economic uncertainties.

A successful Portuguese government bond swap auction helped sentiment earlier in the day.

"Its success is a subtle yet tangible sign that confidence in the European authorities scattered plans will ultimately payoff. Our chart reflects the confidence in a further slide in Portugal's bond yields," noted Andrew Wilkinson, chief economic strategist at Miller Tabak.

November crude oil futures slipped $3.75 to settle down $88.14 a barrel, while December gold futures rose $4.20 to settle at $1,779.80 an ounce.

The benchmark 10-year Treasury rose 1/32, diluting the yield to 1.620%. The greenback was up 0.26%, according to the dollar index.

In corporate news, Best Buy ( BBY) shares got a lift on news that founder Richard Schulze and at least four private-equity firms have started examining the books of the company, the world's biggest consumer electronics chain, in what could become a potential $11 billion buyout, according to people familiar with the matter, Reuters reported. The stock finished nearly 5% higher.

Shares of MetroPCS Communications ( PCS) pulled back after the company confirmed it's in talks with T-Mobile USA about a potential merger. After soaring nearly 18% on Tuesday, the stock shed 10%.

Discount retailer Family Dollar Stores ( FDO) posted fourth-quarter earnings of 75 cents a share on revenue of $2.36 billion, in line with analysts' estimates, and provided an encouraging fiscal 2013 outlook. Shares popped 3.9%.

Monsanto ( MON) reported an as-expected fourth-quarter loss amid weaker corn seed sales and provided disappointing fiscal 2013 earnings guidance. Shares fell 2.2%.

Xyratex ( XRTX) shares plunged 16.7% after the data storage technology provider posted a fiscal third-quarter earnings decline of 20% amid a significant fall in the company's enterprise storage sales.

--Written by Andrea Tse and Joe Deaux in New York.

>To contact the writer of this article, click here: Andrea Tse.

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