Stocks Rise Amid Strong Economic News

Stocks climbed Thursday, led by banks, after investors cheered a pair of employment reports that showed better-than-expected results and as retailers posted monthly chain-store sales that largely outpaced estimates.

The Dow Jones Industrial Average jumped, led by JPMorgan and Intel , after finishing higher in the previous session.

Meanwhile, IBM was among the few laggards on the blue-chip index after Wells Fargo cut its rating on the tech giant to "marketperform" from "outperform."

The S&P 500 and the tech-heavy Nasdaq were also higher. The CBOE Volatility Index, widely considered the best gauge of fear in the market, fell below 16.

Financials and materials led the key S&P sectors, while health care slipped.

Private sector added 157,000 jobs, according to payroll processing firm ADP. The report was far more expected in the month of June, and well ahead of the 68,000 figure that economists polled by Reuters had expected. May's figure was revised down to an increase of 36,000 from the previously reported 38,000, which had been an eight-month low.

Meanwhile, claims for unemployment benefits slipped 14,000 to a seasonally adjusted 418,000 in the previous week, according to the Labor Department. The decline is more than that 420,000 figures that economists had expected.

Investors are focusing on the key government jobs report on Friday. Employers are expected to have added 90,000 jobs, according to a poll of economists by Reuters.

"One thing is an absolute: Tomorrow's number will influence hiring and consumer sentiment for the rest of the summer," said Todd Schoenberger, managing director of LandColt Trading. "Stocks have been on a tear, so traders may be more inclined to unload stocks following the number, even if it surprises on the upside."

Meanwhile, some experts said if the non-farm payroll data tomorrow turns out to be better-than-expected, then it might provide further evidence of a recovery.

“If you combine the better-than-expected ISM manufacturing report [last week] with what could be a better-than-expected jobs report tomorrow, it provides some evidence that the economy may be coming out the soft patch it experienced during the second quarter,” said Michael Sheldon, chief market strategist at RDM Financial Group.

Sheldon noted that stocks have been "range bound" in the 1,250 to 1,370 on the S&P for a few months.

"July has been a positive month [for stocks] if the employment data comes through positively as indicated by the ADP report today, we could see a push above the top end of the range in the next few weeks," he said.

Oil prices held gainsafter a government report said crude oil inventories dropped by 889,000 barrels and following the robust jobs reports. U.S. light, sweet crude traded above $98 a barrel, while London Brent crude rose above $117.

The energy sector also showed strength with Halliburton and Hess up more than 2 percent each.

Most retailers climbed after chains reported June same-store sales that far outpaced expectations as consumers snapped up seasonal items on discount.

Limited Brands , Target and Macy's were among the biggest gainers while JCPenney declined.

Visa hit a 52-week high after at least four brokerages raised their price targets on the firm. Visa shares fell in after-hours trading Wednesday after the firm said revenue growth is expected to slow next year after U.S. regulators finalized their crackdown on debit card processing fees.

Rivals MasterCard and AmEx also rose after KBW raised its price target on both firms.

In other company news, a Reuters report cited sources as saying is investing $150 million-$200 million in an Indian technology solutions provider for banks.

Meanwhile, Western Digital climbed after JPMorgan raised its rating on the the hard drive maker to "overweight" from "neutral."

Starbucks and Yum Brands both slipped after Goldman Sachs downgraded the companies' ratings to "neutral" and "sell," respectively.

Pfizer fell after the drugmaker said it may sell or spinoff its animal health and nutrition units to focus on the pharmaceutical business.

Most health insurers were in the red including WellPoint and Humana .

NYSE Euronext gained after the shareholders approved the merger with Deutsche Boerse.

A resolution to the U.S. debt ceiling debate may be near as President Obama and top congressional leaders resume budget talks to avert a default.

“A budget settlement could be worth 2 to 5 percent to the upside because a lot of people aren’t invested in this market,” John O’Donoghue of Cowen & Co. told CNBC.

European shares hit a five-week highafter a dip the previous day. Meanwhile, the ECB raised interest rates to 1.5 percent, as it continued to brush off concerns over slow growth and debt worries in the euro zone.

On Tap This Week:

FRIDAY: Non-farm payroll, wholesale trade, consumer credit

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