Dow Gains 2 Points Amid Jobs Jitters

Stocks struggled Wednesday as investors digested a solid report on the services sector and a few soft readings on jobs — but were really waiting for the government's jobs report on Friday.

Major indexes finished flatter than flat: The Dow Jones Industrial Averagegained just two points, while the S&P 500added just half a point and theNasdaq slipped just over 7 points.

Materials and energy were the day's best performers as oil rose for a 10th session, settling above $83 a barrel. Oil briefly dipped earlier after a report showed crude inventories rose by 1.3 million barrels last week. Gold hit a 3-week high, settling near $1,140 an ounce. The dollar was mixed, rising against the yen but was slightly lower against the euro.

The Fed offered some insight with the release of the minutes from its last meeting: The central bank modestly raised its projection for GDP growth for the second half and into 2011 and said they see lower core inflation in the next few years.

Several members said they weren't convinced of the labor-market recovery and others expressed worries that the Fed's windown of its program to purchase mortgage-backed securities could hurt the fragile housing recovery.

Evidence of the importance of stimulus to housing came earlier today: The Mortgage Bankers Association reported that demand for home mortgages remained at a six-month lowas mortgage rate scrept higher. The average on the 30-year fixed rose a tenth of a percentage point to 5.18 in the Jan. 1 week.

Pimco's Bill Gross said on CNBC that he doesn't think the Fed will raise rates in 2010 but he sees a 0.3-percent to 0.4-percent increase in the yield on the 10-year Treasury bond in the next six months.

Despite the insight into the Fed's thinking, stocks still struggled as Wall Street is waiting for Friday's jobs report from the Labor Department.

Two private employment reports released today showed a soft recovery. ADP said December job losses dropped to 84,000, below the 90,000 estimate and well below the revised November decline of 145,000. And job-outplacement firm Challenger, Gray & Christmas said planned layoffs were at 45,094 in December, the fewest since December 2007.

ADP undercounts the actual number by an average of 92,000 over the past six months, according to data from Nomura Securities, but Wall Street still watches the report for insight into the Labor Department report. Buzz in the market suggests there may have even been jobs added to payrolls last month — the first time that would've happened in two years. Speculation is that it could be as much as 30,000 or 40,000 jobs added.

Joel Naroff of Naroff Economic Advisors said the real takeaway from the ADP report was to temper expectations — that it's not the end of the world if the report doesn't show job growth.

"I don’t think that firms will start adding lots of people until they believe the recovery will be strong enough to support that long-term commitment," Naroff wrote in a note to clients. "Right now, business confidence, which is rising, is not close to a level where that kind of hiring is likely to take place. So let’s hope for some job growth appearing soon but remain cautious about the outlook for this year."

In the day's other economic news, the ISM said its nonmanufacturing index, which gauges the service sector, rose to 50.1 in December from 48.7 in November. The reading was slightly below expectations but was still above the 50 mark, which indicates growth. The index has been above 50 for three of the past four months.

On the scoreboard: Alcoa, Boeing and Bank of America led the Dow, while Travelers and Verizon were at the bottom of the pack.

Ford barreled past $11 after the auto maker posted better-than-expected sales a day earlier.

Family Dollar was the biggest percentage gainer on the S&P, up more than 12 percent, after the dollar-store chain beat earnings expectations.

Winterizing Your Portfolio - A CNBC Special Report
Winterizing Your Portfolio - A CNBC Special Report

Walgreen shares skidded after the drugstore said same-store sales fell in December — analysts had expected an increase.

Bed, Bath and Beyond shares rose ahead of the home decor chain's earnings, due out after the closing bell.

Overall, the retail sector was mostly higher today after MasterCard's SpendingPulse reported that retailers had a strong finish to the 2009 holiday shopping season.

We'll get more insight into the sector on Thursday, as chain stores report their December sales.

Dow Chemical shares rose after Barclays Capital upgraded the stock to "overweight" from "equal-weight."

Kraft Food shares advanced as the company continues in its battle to acquire Cadbury. Kraftsaid it had a 1.52 percent takeup from Cadbury shareholders for its $16.8 billion hostile bid.

Still to Come:

WEDNESDAY: Earnings from Bed, Bath & Beyond after the bell
THURSDAY: CES; chain-store sales; Bank of England rate decision; jobless claims; Fed's Hoenig speaks; Earnings from Constellation, Lennar
FRIDAY: Jobs report; wholesale trade; Fed's Lacker speaks; consumer credit

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