Stocks advanced on Wednesday as a much stronger-than-expected rise in private sector employment boosted optimism about the outlook for the economy and stocks.
The ADP Employer Services survey showed a rise in private payrolls in December of 297,000, nearly triple the number forecast by economists.
The report came two days before the government’s employment report, and some analysts viewed the data as encouraging for that report and further stock gains.
“The jobs data was really strong and that’s consistent with other data we’ve been seeing. The economy is clearly accelerating,” said Edward Hemmelgarn, president of Shaker Investments in Cleveland.
“It’s difficult to make the case for the market to go down in the first six months of the year,” said Hemmelgarn, who expects industrial shares, typically influenced by economic cycles, to do well this year.
The Dow Jones industrial average (.DJI) gained 37.13 points, or 0.32 percent, to 11,728.31. The Standard & Poor’s 500 Index (.SPX) rose 5.20 points, or 0.41 percent, to 1,275.40. The Nasdaq Composite Index (.IXIC) advanced 13.36 points, or 0.50 percent, to 2,694.61.
Leading the Dow was American Express Co (AXP.N), up 3.1 percent at $45.11.Shares of financials led gains, with the S&P financial index (.GSPF) up 1 percent, while the Nasdaq composite was the strongest among the three major stock indexes.
Among other financials, JPMorgan Chase (JPM.N) was up 1.4 percent at $44.79. Big banks like JPMorgan are expected to boost dividends this year after two years of minimal increases.
The S&P 500 ended 2010 up nearly 13 percent and recorded its best December since 1991, driven in part by encouraging economic data in the latter part of the year.