Stocks jumped Wednesday as investors shrugged off a weaker-than-expected reading on the services sector and cheered an improvement on the jobs front.
Stocks had opened higher after a pair of reports showed an improvement on the jobs front. Then, after a weaker-than-expected report on the services sector, which accounts for more than two-thirds of the economy, stocks initially pared gains, before bounding higher.
The Dow Jones Industrial Average was up more than 100 points, or over 1 percent. The S&P 500 and Nasdaq were up more than half a percent.
All but one of the 30 Dow components were higher today: Alcoa , Disney and Merck led the pack. Kraft was the lone decliner.
Gold hit yet another record this morning — this time it topped $1,093 a troy ounce. Oil topped $80 a barreland the dollar fell.
Intel was under the microscope after the Wall Street Journal reported that New York Attorney General Andrew Cuomo has filed antitrust charges, alleging that the chip giant threatened computer makers and paid them huge sums of money to get them to stop using rival chips.
The ISM reported its gauge of the services sector dropped to 50.6 in October from 50.9 in September. The fact that it came in above 50 means the sector remains in expansion mode but it fell short of the 51.5 reading economists surveyed by Reuters had expected.
Payroll-services firm ADP reported that fewer jobs were lost in October than in previous months and outsourcing-consulting firm Challenger, Gray & Christmas reported planned layoffs hit a 19-month low.
The reports are widely seen as a precursor to the government's October jobs report, due out on Friday. Economists expect to see 175,000 jobs were shed from nonfarm payrolls, fewer than in previous months.
Earlier, the Mortgage Bankers Association said applications for home loans increasedafter interest rates slipped below 5 percent.
Still to come: At 10:30am ET, we'll get the usual Wednesday reading on oil and gasoline inventories from the Energy Department's Energy Information Agency.
Among the notable commentary this morning: Banking analyst Meredith Whitney said "normalized" earnings for banks is a fallacy — with consumers struggling and dramatic regulatory change, earnings will be negatively impacted for a protracted period.
And Nouriel Roubini, the economist often referred to as "Dr. Doom," elaborated on his "mother of all carry trades" theory, saying if the Fed keeps interest rates low, therefore weakening the dollar, it will prolong the carry tradeand make the unwind all the more painful.
The Fed will wrap up a two-day meeting today, issuing its statement at 2:15pm ET. Investors will be looking to see if policy makers remove their vow to keep rates low for an "extended period." Some say it could happen today — others say it's too soon.
"Once they start removing that, that's a real sign that they intend, within six months, to start raising rates," Deutsche Bank economist Torsten Slok told Reuters. "But it's just premature, looking at the economic numbers, to arrive at that conclusion."
In the morning's earnings news, Kraft and Comcast beat estimates, and Time Warner raised its outlook.
After the bell, we'll get reports from Dow component Cisco Systems, News Corp., and Qualcomm.
Oracle and Sun Microsystems skidded as the Financial Times reports that the European Union is close to formally objecting to Oracle's $7.4 billion takeover of Sun on antitrust grounds — which could be a step on the way to blocking the deal.
Auto industry news: Nissan is changing its annual loss forecast to a profit, Toyota is bailing out of Formula One racing because of the weak economy, and General Motorshas decided to keep its EuropeanOpel unit rather than selling it.
- Peter Schacknow contributed to this article.
Still to Come:
WEDNESDAY: Weekly crude inventories; Chrysler business plan; Fed statement; Earnings from Cisco, News Corp., Prudential and Qualcomm after the bell
THURSDAY: Retailers report October sales; BOE, ECB statements; weekly jobless claims; Earnings from Toyota, CVS, Sirius, Unilever, CBS, Nvidia and Starbucks
FRIDAY: October jobs report; Geithner speaks; Droid phone launches; wholesale trade; consumer credit; Fed's Duke speaks
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