NEW YORK — Investors rushed into stocks after stronger reports on service industries and employment eased two of the biggest worries about the economy.
Stocks jumped Wednesday after the Institute for Supply Management said service industry activity grew for a second straight month in October. The trade group’s service index slipped to 50.6 from 50.9 in September. A reading above 50 signals growth. Analysts polled by Thomson Reuters had expected a 51.5.
Although the index didn’t meet forecasts, the ISM said new orders, which are an indicator of future business activity, grew faster. Business activity also picked up.
Encouraging news about the labor market also boosted investors’ mood. The ADP National Employment Report said 203,000 private sector jobs were lost in October, down from the 227,000 lost in September. It was the seventh straight month of declining job losses.
That stirred hopes for a better-than-expected employment report from the Labor Department on Friday.
The two reports calmed some concerns that the economy won’t be able to recover until consumers feel more secure in their jobs to start spending at higher levels.
The early advance also came as investors awaited an assessment of the economy from the Federal Reserve policymakers following the conclusion of a two-day meeting later Wednesday.
Policy makers aren’t expected to raise the Fed’s benchmark interest rate from essentially zero, hoping to sustain an economic turnaround by keeping borrowing rates low. But investors will be looking for the Fed’s take on the 3.5 percent growth in the economy during the third quarter and whether such growth will persist. The market would also like more guidance on how the Fed plans to withdraw its stimulus programs without threatening the recovery.
Investors have grown fearful that the economic rebound they’ve been betting on over the past eight months will be fleeting, considering that job losses remain high and consumers still aren’t spending freely. Stocks have zigzagged over the past few weeks amid the heightened uncertainty.
In midmorning trading, the Dow Jones industrial average rose 137.54, or 1.4 percent, to 9,909.45. It had been up 60 ahead of the services index.
The broader Standard & Poor’s 500 index rose 13.46, or 1.3 percent, to 1,058.87, and the Nasdaq composite index rose 20.18, or 1 percent, to 2,077.50.
Local News
Stocks rise as services sectors grow for 2nd month
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