By Kristina Peterson
U.S. stocks climbed Wednesday as new budget-stabilizing plans
out of Greece reassured investors, who were also cheered by a
smaller-than-expected drop in private-sector jobs and a report of
faster expansion in the services sector.
The Dow Jones Industrial Average (DJI) was up 56 points, or
0.5%, to 10,461, pushing it further into the black for 2010 after
slipping below its break-even point for the year earlier in the
session.
Industrial giant Caterpillar Inc. (CAT) led the measure's gains,
up 2.7%, as the economically sensitive company was boosted by the
latest round of improving data points. General Electric Co. (GE)
also climbed 1.9%, boosted by signs of economic growth.
Merck (MRK) climbed 0.5% as rival drugmaker Pfizer Inc. (PFE)
slid to the bottom of the Dow. Pfizer tumbled 0.6% 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 Index (RIXF) rose 0.5%. The Standard &
Poor 500 Index (SPX) advanced 0.6%, with all its sectors in the
black, led by materials, industrials and energy.
Headlining the economic news, payroll giant Automatic Data
Processing said the private sector lost 20,000 jobs in February,
less than half the anticipated drop. The February employment
decline was the smallest since employment began falling in February
2008. .
Also boosting sentiment, the Institute for Supply Management
said U.S. nonmanufacturing sector expanded at a
faster-than-expected pace in February, although the report showed
employment within the broad sector was still contracting. .
"We've been looking at this great jump in the manufacturing
economy, but the services side has really been dormant, so seeing
this uptick has been pretty constructive," said Jim McDonald, chief
investment strategist at Northern Trust Global Investments. He said
the ADP report took some of the edge off investors' primary
concern.
"Jobs are the holy grail of the current market mentality,"
McDonald said.
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.
Greece's planned measures helped prop up the euro against the
dollar, which was also weaker 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 10/32 to
yield 3.646%.
Among stocks in focus, Novell Inc. (NOVL) surged 27%, topping an
offer price announced late Tuesday from hedge fund Elliott
Associates 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 home
builder 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.
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.