Reports released yesterday showed a three times jump over economists' expectations regarding job creation in the private sector in December 2010. Positive data from the Institute of Supply Management also boosted investors' confidence. Additionally, on a sectoral basis, the financial sector led a strong rally, primarily helped by a surge in stocks of credit card companies. These factors combined on Wednesday to help the markets end on a winning note. The Dow also recorded a straight third day jump in all the three trading days of the year.
The Dow Jones Industrial Average gained 0.27% and closed at 11,722.89. The S&P 500 rose 0.50% and ended the day at 1,276.56 and the Nasdaq closed at 2,702.20, up 0.78%. On the New York Stock Exchange, advancing stocks overshadowed the declining ones in a ratio of 3:2 on average volumes.
According to the Automatic Data Processing (ADP) National Employment Report, the private sector added 297,000 jobs in December 2010. This number also surpassed economists' expectation of 100,000 more jobs in private companies. The report also suggested a 92,000 jobs growth for November 2010. Investor's sentiment was boosted by this report, which came two days ahead of the Labor Department's non-farm payroll report. Economists hereafter will expectedly be revising their estimates in the run up to the Labor Department announcing the report. Hiring increased in most of the industries, as the services and goods-producing sectors both rose by 270,000. The manufacturing sector increased hiring by 23,000 and while employment in the construction sector remains unchanged, the financial sector lost 8,000 jobs last month. Meanwhile, John Boehner of the Republican took charge as the speaker of the House of Representatives which fueled hope for a more business-oriented approach from Congress.
Coming to the other report, the Institute of Supply Management reported a surge in service sector activity in December last year. Signaling healthy growth, the index jumped to 57.1 in December 2010 surpassing prior estimates and also increased from the 55.0 mark recorded in November 2010.
Credit card companies led financials on Wednesday's trade. Gains in the sector was led by a jump in prominent shares, such as Capital One Financial Corp. COF which rose 4.2%, JP Morgan JPM which was up 1.2%, Bank of America BAC which gained 1.8%, American Express AXP which surged 2.9% and Citi C which edged up 1.4%. In other news, shares of insurance giant American International Group AIG soared 7.3% after the company divulged that it had received a $3 million bid from potential buyers for its Taiwan insurance unit.
On to individual counters, shares of Walt Disney DIS jumped 2.5% after Morgan Stanley MS and Goldman Sachs GS published a bullish strategy in their research reports for the company. Monster World Wide Inc MWW rose 3.6% and closed at $25.03. The stock had risen more than 73% since October end after rising sharply ahead of the stronger-than-expected payrolls data for that month. Family Dollar Stores FDO tanked 8.8% after the company's first quarter earnings fell short of analysts' expectations. The company reported earnings of $0.58 per share against analysts' expectation of $0.61 per share. Shares of Autodesk ADSK sprung 7.1% after Goldman Sachs upgraded the company from “neutral” to “buy”.
AUTODESK INC (ADSK): Free Stock Analysis Report
AMER INTL GRP (AIG): Free Stock Analysis Report
AMER EXPRESS CO (AXP): Free Stock Analysis Report
BANK OF AMER CP (BAC): Free Stock Analysis Report
CITIGROUP INC (C): Free Stock Analysis Report
CAPITAL ONE FIN (COF): Free Stock Analysis Report
DISNEY WALT (DIS): Free Stock Analysis Report
FAMILY DOLLAR (FDO): Free Stock Analysis Report
GOLDMAN SACHS (GS): Free Stock Analysis Report
JPMORGAN CHASE (JPM): Free Stock Analysis Report
MONSTER WWD INC (MWW): Free Stock Analysis Report
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