Dow closes up 44 on jobs, service news

NEW YORK -- Reassuring signs on employment and growth in the service industry got the stock market back on an upward trajectory Wednesday.

Major indexes rose moderately after reports showed private sector hiring and services activity both grew more than expected in July. The Dow Jones industrial average rose 44 points.

Investors were relieved that the two reports provided no signs that the economy might be headed back into recession, even though growth might be sluggish. Traders have grappled with earnings and economic reports at odds with each other in recent weeks that provide a mixed picture about the pace of recovery.

The latest batch of earnings were largely better than expected, continuing a trend that has been seen over the past four weeks. Broadcaster CBS Corp., video game maker Electronic Arts Inc., online travel site Priceline.com Inc. and Anadarko Petroleum Corp. all climbed. Whole Foods Market Inc. was one of the few to report disappointing results.

The market has been mainly climbing over the past month on encouraging earnings and corporate profit forecasts. The Dow has gained 10.3 percent since closing at its lowest level of the year on July 2.

Despite the upbeat earnings and better-than-expected economic reports, many investors remain tentative ahead of the Labor Department's monthly employment report. Quincy Krosby, Prudential Financial's market strategist, said the market needs much more than one positive report on private sector employment to gain confidence that the pace of recovery will speed up.

"ADP was positive, but when all is said and done, the market needs stronger confirmation to grind higher," Krosby said. Until then, stocks are likely to trade in a tight range, she said.

The Dow Jones industrial average rose 44.05, or 0.4 percent, to 10,680.43. The Standard & Poor's 500 index rose 6.78, or 0.6 percent, to 1,127.24, while the Nasdaq composite index rose 20.05, or 0.9 percent, to 2,303.57.

The Dow's rise Wednesday more than erased a 38-point loss from a day earlier when reports on personal income and spending and factory orders fell short of expectations.

Nearly three stocks rose for every one that fell on the New York Stock Exchange, where volume came to a light 975 million shares.

Volume remains light, which means the few people in the market are mainly professional traders, said Bob Phillips, managing partner at Spectrum Management Group. Those types of investors typically trade quickly on the latest piece of news to be released, Phillips said. That adds to market volatility.