By Kristina Peterson
U.S. stocks rose Wednesday as investors were encouraged by
fewer-than-expected job losses in the private sector and expansion
in the services sector that came at a faster-than-projected
pace.
New plans unveiled by Greece to manage its budget provided
additional relief.
The Dow Jones Industrial Average (DJI) was up 50 points, or
0.5%, at 10455 in recent trading. Industrial giant Caterpillar Inc.
(CAT) led the measure's gains, up 2.6%, as the
economically-sensitive company was boosted by the latest round of
improving data points. General Electric Co. (GE), which is also
particularly sensitive to the economy, was also strong, up
1.1%.
Merck (MRK) climbed 1.2% as rival drug-maker Pfizer Inc. (PFE)
slid to the bottom of the Dow. Pfizer tumbled 0.4% after Medivation
Inc. (MDVN) said its experimental Alzheimer's disease treatment
Dimebon, which was in development with Pfizer, was not effective in
a large late-stage study. The news also sent shares of
Medivation--which has no products on the market and is not a Dow
component--plunging 68% on heavy volume.
The Nasdaq Composite (RIXF) rose 0.3%. The Standard & Poor's
500-share index (SPX) advanced 0.5%, with all its sectors in the
black, led by materials, industrials and energy.
Brightening the labor market outlook, payroll giant Automatic
Data Processing said the private sector lost 20,000 jobs in
February, less than half the anticipated drop, according to its
national employment report published with consultancy Macroeconomic
Advisers. The February employment drop was the smallest since
employment began falling in February 2008. .
Also boosting sentiment, the Institute for Supply Management
said U.S. non-manufacturing sector expanded at a
faster-than-expected pace in February, although the report showed
employment within the broad sector was still contracting. .
Kevin Kruszenski, national director of equity trading at KeyBanc
Capital Markets, noted that while traders responded positively to
both the ADP jobs data and the ISM report, "everybody's waiting for
the [government's] Friday jobs number so you're going to see some
ho-hum trading today and tomorrow in front of that."
The Greek government announced a new austerity plan Wednesday
totaling EUR4.8 billion ($6.53 billion) to ensure it can meet its
deficit-cutting pledge this year, including steep cuts in civil
service salaries and entitlements. Greece will also raise its sales
tax by two percentage points.
While investors found the plans encouraging, Kruszenski said,
"once Greece gets out of the way, there's Spain and Portugal. That
potentially could keep a lid on the market longer term. Sovereign
debt is going to be a theme this year."
Greece's planned measures helped prop up the euro against the
dollar, which was stronger against the yen. In other markets,
crude-oil prices climbed above $80 a barrel, while gold futures
also rose. Treasurys declined, with the 10-year note off 9/32 to
yield 3.644%.
Among stocks in focus, Novell Inc. (NOVL) surged 28%, topping an
offer price announced late Tuesday from hedge fund Elliott
Associates LP and sparking speculation another software company or
hedge fund could step in with a higher bid.
Elliott, which disclosed it already holds an 8.5% stake in
Novell, offered to buy the rest of the company for about $1.8
billion, or $5.75 a share.
Hovnanian Enterprises Inc. (HOV)climbed 5.3% after the
homebuilder swung to a fiscal first-quarter profit, ending a streak
of 13 consecutive quarters in the red. The latest to benefit from a
federal tax credit, Hovnanian also reported fewer write-downs and
its lowest cancellation rate since 2005. Still to come, Atlanta Fed
President Dennis Lockhart will speak at 1 p.m. Eastern and the Fed
will release its Beige Book on the economy an hour later.
Earlier Wednesday, Federal Reserve Bank of Boston President Eric
Rosegren said the low rates maintained by the central bank during
much of last decade were not a main driver of the housing market
bubble, suggesting the current rate policy is not creating fresh
troubles.