Wednesday, Apr 25, 2018
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Stocks edge higher after growth in services, private sector hiring

NEW YORK — Stocks edged higher in early trading Wednesday after a trade group reported that the U.S. service sector continued to grow in September. Private company hiring also increased.

At noon Eastern, the Dow Jones industrial average was up 60 points, or 0.6 percent, to 10,868. The Standard and Poor's 500 index rose 9, or 0.8 percent, to 1,133. The Nasdaq composite gained 36, or 1.5 percent, to 2,441.

The Institute of Supply Management said its gauge of the U.S. service sector, which employs 90 percent of the work force, grew in line with Wall Street's expectations. The index measures the strength of health care providers, banks, real estate, and other businesses outside of manufacturing.

Payroll processor ADP said private companies added 91,000 jobs last month. That was a slight gain from August. ADP's figures do not always predict what the government's broad employment report, which will be released Friday, but they can often influence traders' expectations. Wall Street economists expect that the unemployment rate will remain unchanged at 9.1 percent.

The latest indications that the U.S. economy continued to grow pushed Treasury prices lower as investors moved money out of lower-risk investments. The yield on the 10-year Treasury rose to 1.90 percent from 1.82 percent late Tuesday. It hit a record low of 1.71 percent Sept. 22.

Some analysts said that Wednesday's gains were a continuation of a late day rally Tuesday sparked by reports that European officials are exploring a joint effort to support the region's struggling banks. That could limit the damage to the financial system should the Greek government miss a payment on its debt and trigger a default, which many traders expect. A default by the Greek government would cause losses for the region's banks, many of which have large holdings of Greek bonds that would plummet in value in the case of a default.

The reports, which came out after European markets closed Tuesday, triggered a late rally in U.S. stocks that prevented the S&P 500 from entering a bear market — a 20 percent decline from its April peak.

"The market is trading on sentiment right now, not fundamentals," said Rob Stein, head of Astor Asset Management. "People are hoping that the bounce yesterday means that we've hit a bottom, but the problems that were in the economy Monday haven't changed since then."

Cisco Systems Inc. led the 30 stocks that make up the Dow with a 4.7 percent gain. Bank of America lagged, dipping 1.6 percent. The bank has lost 8 percent over the last week.

European stock markets rose broadly. Germany's DAX jumped 5 percent. Benchmark indexes in France and Italy rose 4 percent.

In U.S. corporate news, seed company Monsanto rose 4 percent after it announced that its fourth-quarter results beat Wall Street's expectations. Wholesale club operator Costco Wholesale Corp. dropped 2.7 percent after its earnings came in at $1.08 per share, slightly below analyst's expectations of $1.10 per share. The company said it will raise its annual membership fees in November.

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