ADP reported this morning 114,000 private sector jobs created in July. However take this number with a grain of salt since they were so off from reality in their June figure. Let's wait for the official number on Friday from the government.
More bad news on the economy as service firms expanded at the slowest pace in 17 months.
Here are the top financial stories of the day:
1) S&P ends string of losses on tech rebound-From Reuters
The S&P 500 index rose on Wednesday, snapping a seven-day losing streak, but worries about the economy kept investors jittery and trading volatile.
Trading was the busiest since mid-March, with more than 10 billion shares changing hands as the S&P dipped to a new low for 2011 before storming back to finish higher.
Technology shares gained after days of hefty selling that briefly pushed the Nasdaq into negative territory for 2011 before the composite index ended with solid gains.
But many investors view the gains as a short-term rebound after the S&P's 6.8 percent decline over the past seven days.
"We are not in a bear market psychology yet, but we are definitely in a solid correction psychology," said James Dailey, portfolio manager of Team Asset Strategy Fund in Harrisburg, Pennsylvania.
Recent poor figures on consumer spending and factory activity underline the economy's precarious position after a weak first half of the year. That, along with the festering European debt crisis, is likely to keep buyers cautious.
"The events in Europe and the U.S. debt ceiling issues that have been overshadowing the weak underlying fundamentals are gone now and investors are starting to realize that we are not in a good situation," Dailey said.
The S&P technology index (^GSPT - News) was up 1.2 percent while energy stocks were the hardest hit.
The S&P energy sector (SNP:^GSPE - News) fell 0.6 percent.
The Dow Jones industrial average (DJI:^DJI - News) was up 29.82 points, or 0.25 percent, at 11,896.44. The Standard & Poor's 500 Index (^SPX - News) was up 6.29 points, or 0.50 percent, at 1,260.34. The Nasdaq Composite Index (Nasdaq:^IXIC - News) was up 23.83 points, or 0.89 percent, at 2,693.07.
Helping the Nasdaq, Research In Motion (Toronto:RIM.TO - News; NasdaqGS:RIMM - News) shares rose 4.9 percent to $25.33 after unveiling two new and powerful versions of its touchscreen BlackBerry Torch, including an all-touch model, as it seeks to regain ground lost to Apple and Google.
MasterCard Inc (NYSE:MA - News) shares also jumped 13.4 percent to $338.47 after the company reported second-quarter profit that rose 33 percent.
Traders said some buyers came into the market after comments from former Federal Reserve Vice Chairman Donald Kohn, who told the Wall Street Journal the Fed could consider a new round of stimulus to help the economy.
Driving the early losses was data showing the pace of growth in the U.S. services sector fell in July to its lowest since February 2010, while new U.S. factory orders fell in June, pulled down by weak demand for transportation equipment.
The news followed weaker-than-expected manufacturing data earlier this week, creating more angst about a pullback in the recovery.
Some 10.5 billion shares changed hands on the New York Stock Exchange, NYSE Amex and Nasdaq, the highest since mid-March and above the daily average of around 7.48 billion.
On the NYSE, advancers beat decliners 1,725 to 1,274.
On the Nasdaq, advancers outpaced decliners 1,511 to 1,054.
2) Private-Sector Jobs Increase by 114,000- From The Wall Street Journal
Private businesses added more jobs than expected in July, according to a report released Wednesday, but similarly strong figures last month raised hopes that were dashed when the government's official data were released.
Private-sector jobs in the U.S. rose by a modest 114,000 last month, according to a national employment report published by payroll giant Automatic Data Processing Inc. and consultancy Macroeconomic Advisers.
Economists surveyed by Dow Jones Newswires had expected ADP would report a gain of 105,000 for July. The June data were revised to show a rise of 145,000 versus the 157,000 first reported on July 7.
The strong June ADP jobs number had caused investors and economists to hope the U.S. labor markets had turned the corner toward stronger hiring. Stocks rose on the news, and many forecasters lifted their nonfarm-payrolls forecast after the release of the June number.
Instead, the Labor Department on July 8 said only 18,000 new jobs were added in June and the unemployment rate increased to 9.2% from 9.1%.
The ADP survey tallies only private-sector jobs, while the Bureau of Labor Statistics' nonfarm-payroll data, to be released Friday, include government workers.
Economists surveyed by Dow Jones Newswires expect total nonfarm payrolls rose by only 75,000 in July, with layoffs expected in the state- and local-government sectors. The July unemployment rate is expected to remain at 9.2%.
The latest ADP report showed businesses with 500 or more employees added 9,000 new employees in July, while medium-size businesses added 47,000 workers and small businesses, with fewer than 50 employees, hired 58,000 new workers.
Service-sector jobs increased by 121,000 in July, but factory jobs fell by 1,000.
ADP, of Roseland, N.J., says it processes payments of one in six U.S. workers, while St,. Louis-based Macroeconomic Advisers is an economic-consulting firm.
Other job-related news released Wednesday was mixed.
Layoffs jumped in July, according to Challenger Gray & Christmas. The outplacement firm said an unexpected burst in private-sector downsizing pushed the number of announced job cuts to a 16-month high of 66,414 in July, 60% above the June number and the highest number since March 2010.
The report said the July job-cut surge was dominated by a handful of private-sector employers, including Merck & Co., Borders Group Inc., Cisco Systems Inc., Lockheed Martin Corp. and Boston Scientific Corp. The job cuts from these five companies accounted for 57% of the July total.
On a more positive note, TrimTabs Investment Research estimated the that economy added 161,000 jobs in July, up from 128,000 estimated in June.
3) Services firms expand at slowest pace in 17 months-From the AP
The U.S. service firms, which employ nearly 90 percent of the country's work force, experienced their weakest growth in 17 months in July. The report confirms other data that show the economy is struggling two years after the recession ended.
The Institute for Supply Management said Wednesday its index for services companies fell to 52.7, from 53.3 in June. Any reading above 50 indicates expansion.
The ISM's index covers a range of service industries, including health care, retail, and financial services. The index reached a five-year high of 59.7 in February, but has fallen since then.
Growth slowed to less than 1 percent in the first six months of this year, the government said Friday.
Consumer spending, which fuels 70 percent of economic activity, fell 0.2 percent in June. It was the first decline since September 2009.
Less spending has hurt service-sector companies such as restaurants, retailers, and amusement parks.
As the economy has slowed, so has hiring. Employers added only 18,000 jobs in June, the fewest in nine months. The unemployment rate rose to 9.2 percent.
The government will release the July jobs report Friday. Economists predict only 90,000 jobs were added last month and the unemployment rate was unchanged. The economy needs roughly three times that many jobs to reduce the unemployment rate.
Much of the slowdown stems from a spike in gas prices since last year. That reduces the amount of money consumers can spend on discretionary goods such as furniture, electronics, and appliances. Spending on those categories has fallen for three straight months.
Spending fell largely because most Americans aren't seeing any pay increases. Incomes rose only 0.1 percent in June, the department said, the smallest gain since September. Americans are also saving more, boosting the savings rate to 5.4 percent.
Manufacturing output has also been hit by supply disruptions stemming from Japan's March 11 earthquake, which caused auto companies in the U.S. to reduce production.
Many analysts had predicted the economy would turn around in the second half of the year once those temporary factors began to fade.
But the ISM's manufacturing report, released Monday, showed the economy is still deteriorating. The manufacturing index fell to 50.9, its lowest level in two years.
Most economists have reduced their growth forecasts. Paul Dales, an economist at Capital Economic, now expects growth of only 2 percent in the second half of the year, down from an earlier forecast of 2.5 percent.
Quote of the Day from Dave Ramsey.com:
Success is how high you bounce when you hit bottom. — George S. Patton
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