Stocks finished higher Wednesday, extending the previous session's late buying as strong earnings reports offset a jump in oil prices. Traders were also assessing employment numbers before the jobs report due Friday, which should stoke further debate over the Federal Reserve's interest-rate plans, says Standard & Poor's Equity Research.
The Dow Jones industrial average rose 74.2 points, or 0.67%, to 11,199.93. The broader Standard & Poor's 500 added 7.63 points, or 0.6%, to 1,278.55. The tech-heavy Nasdaq composite climbed 16.82 points, or 0.82%, to 2,078.81.
Trading was moderate ahead of the payrolls report. NYSE breadth was decidedly positive, with 23 issued advancing for every 10 declining, while NASDAQ breadth was 19-11 positive.
The Fed faces a difficult decision on whether to continue raising interest rates at its Aug. 8 meeting, some analysts say. "Many now assume that slower U.S. growth, or something worse, is here to stay and that it will quickly cap the cyclical rise in inflation," notes Richard Berner, chief U.S. economist at Morgan Stanley. "I'm far less sure."
The economic calendar shed little light Wednesday on the Fed outlook. The ADP employment index showed an increase of 99,000 jobs in July, after a 368,000 jump in June, ahead of Friday's closely watched payrolls report. Market players will be awaiting the data for a sense of the odds that the Fed hikes rates again Aug. 8.
Investors will have more economic figures to digest Thursday. Data releases due next session include June factory goods orders, the July reading of the Institute for Supply Management's non-manufacturing index of business activity, and weekly jobless claims.
In earnings news, Time Warner (TWX) was higher after the media company said it swung to a second-quarter profit and announced it will give away free America Online services.
Dow member Procter & Gamble (PG) was also higher after the consumer products maker reported a 36% surge in quarterly profit on 25% higher sales.
Insurer Cigna (CI) was up sharply as a 62% decline in second-quarter profit topped Wall Street expectations.
Coffee giant Starbucks (SBUX) was set to post earnings after the closing bell. Companies slated to report results Thursday include Gateway (GTW), Sprint Nextel (S), and Tyco (TYC).
Among other stocks in focus, Ford (F) was higher on a report the automaker is hiring a former investment banker to re-evaluate the company's brands and assets, such as Jaguar.
Rival General Motors was lower as the automaker restated its second-quarter results to show a $200 million wider loss due to a tax change.
Meanwhile, Advanced Micro Devices (AMD) was higher after IBM (IBM) unveiled plans to expand its use of the chipmaker's processors in IBM computers.
Shares of Adobe Systems (ADBE) surged after the software maker maintained its outlook for third-quarter sales and earnings even as customers postpone purchases.
On the deal front, Pozen (POZN) was sharply higher after AstraZeneca (AZN) agreed to pay as much as $375 million to the company to develop a pain reliever with reduced stomach side effects.
In the energy markets Wednesday, September West Texas Intermediate crude oil futures closed up 90 cents at $75.81 a barrel after a weekly inventory report showed a wider-than-expected decline in crude supplies, amid escalating Mideast tension and prospects for an Atlantic hurricane.
European markets finished higher. In London, the Financial Times-Stock Exchange 100 index rose 51.3 points, or 0.87%, to 5,932.1. Germany's DAX index gained 84.08 points, or 1.5%, to 5,680.82. In Paris, the CAC 40 index was up 78.02 points, or 1.58%, to 5,026.25.
Asian markets finished higher. Japan's Nikkei 225 index nudged up 23.38 points, or 0.15%, to 15,464.29. In Hong Kong, the Hang Seng index advanced 121.38 points, or 0.72%, to 17,032.75. Korea's Kospi index gained 7.75 points, or 0.6%, to 1,295.11.
Treasury yields eased in the wake of the ADP employment data and reports that derivatives traders expect an increase of 152,700 jobs in July. Meanwhile, the government announced unexpectedly that it will start selling 30-year bonds on a quarterly basis next year. The 10-year note rose modestly in price to 101-10/32 for a yield of 4.97%, while the 30-year bond moved higher to 91-22/32 for a yield of 5.04%.