NEW YORK (MarketWatch) — U.S. stocks on Wednesday rose sharply for a second day after reports cast a better-than-expected light on the U.S. economy and optimism increased that Europe would recapitalize banks.
“These economic data points really point toward an environment that is slow growth and not a recession, yet we’ve priced in a recession,” said Burt White, chief investment officer for LPL Financial. “The GDP in the third quarter is going to be stronger than the first two quarters combined.”
Up for much of the session, U.S. stock indexes gained momentum to clear session highs in the final 30 minutes of trade.
The Dow Jones Industrial Average DJIA +1.21% was lately up 122.38 points to 10,931.09, with 25 of its 30 components rising. It rose as much as 142 points and fell as much as 70 points during the session.
The S&P 500 Index SPX +1.79% rose 19.49 points to 1,143.44, with natural-resource companies the best performing and telecommunication firms the greatest laggards among its 10 industry groups.
Monsanto Co. MON -4.97% shares advanced 5.4% after the seed company reported fourth-quarter results that topped analysts’ expectations.
Shares of Costco Wholesale Corp. COST +1.75% fell 2% after the wholesale club tallied earnings slightly below expectations.
The Nasdaq Composite Index COMP +2.32% advanced 52.73 points to 2,457.55.
For every stock falling nearly three gained on the New York Stock Exchange, where 938 million shares had traded as of 3:15 p.m. Eastern.
Crude futures CL1X +5.37% rose $4.01 to finish up to $79.68 a barrel, and gold futures added $25.60 to $1,641.60 an ounce.
Stock indexes turned up after the Institute for Supply Management reported its gauge of U.S. service industries fell to 53 last month from 53.3 in August, with a reading above 50 indicating expansion.
“Recent data seen in the August-September time frame, capturing the change that occurred in the global economy and markets, have hung in better than feared,” Peter Boockvar, equity strategist at Miller Tabak, noted in emailed commentary.
“While the U.S. economy still remains challenging, the view was of Europe and China in the last two months and a wait-and-see attitude seems to be the result rather than a big change in behavior,” he added.
Automatic Data Processing reported U.S. companies added 91,000 jobs in September, with the rise following a revised 89,000 gain the month before. The payroll processor’s better-than-expected report comes two days before the Labor Department releases its monthly report on nonfarm payrolls for September.
Another report from consultants Challenger Gray & Christmas Inc. found a spike in planned layoffs last month, with the reductions largely coming in the U.S. military and at Bank of America Corp. BAC -0.17%
The International Monetary Fund on Wednesday said European Union officials were working to hike bank capital to curb the debt debacle.
“We’re starting to see greater faith that Europe may be finally getting to a point to resolve some of its issues,” according to White at LPL Financial.
European stocks also gained Wednesday, after reports officials were looking at a joint effort to back the region’s embattled banks and stem the damage to the euro-zone financial system in the event of a default by Greece. Read more in Europe Markets.
Those reports helped spark a late Tuesday rally on Wall Street that had the Dow industrials surging 270 points in the final 30 minutes of regular trading and kept the S&P 500 from closing in bear-market territory.
