Stocks Give Back Ground But Close In Positive Territory - U.S. Commentary

(RTTNews) - Stocks saw notable strength in morning trading on Wednesday before giving back some ground in the afternoon. Despite the pullback by the major averages, the Dow still ended the session at a new record closing high.

The major averages closed in positive territory but well off their best levels of the day. The Dow rose 54.45 points or 0.2 percent to 26,828.39, the Nasdaq climbed 25.54 points or 0.3 percent to 8,025.08 and the S&P 500 inched up 2.08 points or 0.1 percent to 2,925.51.

Upbeat economic data contributed to the early strength on Wall Street, although buying interest waned as the data also raised concerns about the outlook for interest rates.

Before the start of trading, payroll processor ADP released a report showing stronger than expected private sector job growth in the month of September.

ADP said private sector employment jumped by 230,000 jobs in September after climbing by an upwardly revised 168,000 jobs in August. Economists had expected employment to increase by about 185,000 jobs.

"The labor market continues to impress," said Ahu Yildirmaz, vice president and co-head of the ADP Research Institute. "Both the goods and services sectors soared."

"The professional and business services industry and construction served as key engines of growth," she added. "They added almost half of all new jobs this month."

On Friday, the Labor Department is scheduled to release its more closely watched monthly jobs report, which includes both public and private sector jobs.

The report is expected to show employment climbed by about 188,000 jobs in September after jumping by 201,000 jobs in August.

A separate report from the Institute for Supply Management showed an unexpected acceleration in the pace of growth in U.S. service sector activity in September.

The ISM said its non-manufacturing index climbed to 61.6 in September from 58.5 in August, with a reading above 50 indicating growth in the service sector. Economists had expected the index to dip to 58.0.

With the unexpected increase, the ISM said the non-manufacturing index reached its highest level since the inception of the composite index in 2008.

Sector News

Financial stocks turned in some of the market's best performances on the day, as treasury yields soared following the upbeat economic data. The ten-year yield reached its highest level in seven years.

Reflecting the strength in the financial sector, the NYSE Arca Broker/Dealer Index and the KBW Bank Index surged up by 1.6 percent and 1.5 percent, respectively.

Significant strength was also visible among energy stocks, which moved higher along with the price of crude oil. Crude for November delivery jumped $1.18 to $76.41 a barrel despite the release of a report showing a weekly spike in crude oil inventories.

On the other hand, gold stocks came under pressure on the day after ending the previous session sharply higher. After surging up by 3.6 percent on Tuesday, the NYSE Arca Gold Bugs Index dropped by 1.4 percent.

Interest rate-sensitive utilities, housing, and commercial real estate stocks also moved to the downside amid the jump by treasury yields.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Wednesday. Japan's Nikkei 225 Index slid by 0.7 percent, while Hong Kong's Hang Seng Index slipped by 0.1 percent.

Meanwhile, the major European markets moved to the upside on the day, although the German markets were closed for a holiday. The French CAC 40 Index and the U.K.'s FTSE 100 Index climbed by 0.4 percent and 0.5 percent, respectively.

In the bond market, treasuries moved sharply lower following the release of the upbeat economic data. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 10.5 basis points to a seven-year closing high of 3.161 percent.

Looking Ahead

Reports on weekly jobless claims and factory orders may attract attention on Thursday, although trading activity is likely to be somewhat subdued ahead of the release of the monthly jobs report on Friday.