Dow up 93 as stocks near 2011 highs

The Nasdaq tops its April closing high but falters. Private employment grows, and jobless claims fall. Retailers say warm weather and discounts boosted June sales. Crude oil shoots higher.

By Charley Blaine Jul 7, 2011 1:15PM
Charley BlaineUpdated: 8:41 p.m. ET

A better-than-expected report on private payroll employment and a dip in jobless claims gave Wall Street a big reason to cheer today. And investors did cheer until late in the day, when a bit of profit-taking crept in.

The reports, especially the ADP National Employment Report, are raising hopes that Friday's big report on unemployment and payroll employment will show some economic improvement. Because of the ADP report, IHS Global Insight raised its projection for job growth from 100,000 to 140,000 jobs.

Even if the market fell back from its highs of the day, the major averages finished within a percentage point of their 2011 highs, reached on April 29, and the Nasdaq Composite Index ($COMPX) was above its April 29 close of 2,873.54 for much of the day. The Dow Jones Transports ($DJT) hit a new closing high.

Pushing the market higher were small-cap, financial and retail stocks. Retailers reported generally better-than-expected June sales. Kohl's (KSS) and Target (TGT) were the second- and third-best performers among stocks in the Standard & Poor's 500 Index ($INX).

The Dow Jones industrials ($INDU) closed up 93 points, or 0.7%, to 12,719. The S&P 500 was up 14 points, or 1.1%, to 1,353, and the Nasdaq rose 39  points, or 1.4%, to 2,873, just below that April 29 close.

Article continues below.
Since a summer rally erupted on June 27, the Dow and S&P 500 are up 6.9%; the Nasdaq is up 8.5%. The Russell 2000 Index ($RUT.X), up 14 points, or 1.7%, to 859, is up 7.7% in that time.

The Nasdaq topped its April 29 closing high at 1:10 p.m. ET but fell back in the last half-hour of trading. Still, today's gain was its eighth in a row. The Dow and S&P 500 finished within a percentage point of their April 29 highs. 

The big question is whether the selling at the end of the day was simple profit-taking or the emergence of resistance that would generate new waves of selling. Watch to see if the S&P 500 can get past today's high of 1,356.

ADP sees healthy job gains, but construction jobs lag
The immediate catalyst for today's rally was ADP's report, which said private nonfarm employers had added 157,000 jobs in June. That was better than the expected gain of 68,000. The service industry added 130,000 jobs, with goods-producing businesses adding 30,000.

ADP, more formally Automatic Data Processing (ADP), is a major payroll processor. The report comes out a few days before the Labor Department's monthly report on payroll employment and unemployment. It often -- but not always -- signals where the government's numbers will land.

The Labor Department report will come out at 8:30 a.m. ET Friday, before the market opens.

While there were job gains in small, medium and large businesses, construction employment fell 4,000 in June and has been mostly flat since December, the report said. That mirrors construction trends this year. Construction employment has fallen by 2.1 million since its peak in January 2007.

Employment in the financial services sector fell 3,000 in June. The industry has shed 686,000 since January 2007.

Meanwhile, initial jobless claims fell to a seasonally adjusted 418,000 in the week ended July 2, the Labor Department said today. That was down from 432,000 the week before. The report was a bit better than expected, but it was also the 13th straight week that jobless claims topped 400,000.

At the same time, jobless claims are down 35% from their peak in June 2009.

Also helping the rally was President Obama's comment that budget negotiations had been "very constructive," although the two sides "were still far apart on a wide range of issues." In addition, Standard & Poor's raised its outlooks on California debt to "stable."

Energy prices -- New York close



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Crude moves higher; pump prices on the rise
Crude oil (-CL) settled up $2.02, or 2.1%, to $98.67 a barrel, in part because of the stock market rally and after an Energy Department report showed lower-than-expected domestic supplies. Brent crude was up $4.97 to $118.59 a barrel. Wholesale gasoline futures (-RB) were up 8.1 cents, or 2.2% to $3.0788 a gallon.

The national average retail price of gasoline was up 1.4 cents to $3.583 a gallon, AAA's Daily Fuel Gauge Report showed. The price has risen 4 cents since June 30.

Gold (-GC) rebounded and settled up $1.20 to $1,530.60 an ounce. Silver (-SI) was up 62 cents to $36.536 an ounce. Copper added 10.7 cents to $4.442 a pound. The gains for metals helpedFreeport-McMoRan Copper & Gold (FCX) rise 3.7% to $55.49. Alcoa (AA), which reports earnings on Monday, was up 1.5% to $16.49.

The dollar was down slightly against the euro and the Canadian dollar.

Interest rates were higher, with the 10-year Treasury yield at 3.149%, up from Wednesday's 3.095%. Freddie Mac said 30-year mortgages averaged 4.6% in the last, up from 4.5% a week ago and 4.57% a year ago.

Rates moved higher in part because of the stock market rally, which pulled money from bonds. But the move higher was also partly due to the European Central Bank's decision to move its benchmark rate to 1.5% from 1.25%.

What lower gas and warm weather can do for shoppers
How good were same-store sales in June for retailers? Surprisingly good, actually. Thomson Reuters said sales were up 6.5%, the biggest gain since February 2004, and the Standard & Poor's Retail Index ($RLX) was up 13 points, or 2.4% to 557. The index is up 9.6% this year, beating the major averages.

Target's sales were up 4.5%; analysts had been looking for a 3.2% gain. Limited Brands (LTD) saw a 12% gain; analysts had expected a 3.4% gain. Limited shares were up 2.7% to $40.36. Costco Wholesale (COST) said sales rose 14%. Luxury department store Saks (SKS) reported an 11.9% rise and teen retailer Zumiez (ZUMZ) said sales were up 9.8%.

What caused the explosion of buying: lower gas prices, widespread discounting and warm weather, analysts told the Los Angeles Times.

Urban Outfitters (URBN), meanwhile, finished up 6% to $32.58 after an upgrade from Morgan Stanley.

Financials lead the market
Financial stocks were the strongest sector of the S&P 500 in part because of reports that mortgage lenders are in "advanced talks" to settle state and federal claims over faulty foreclosures.

JPMorgan Chase (JPM) was up 1.9% to $41.32. Wells Fargo (WFC) added 1.9% to $28.66, Citigroup (C) rose 1.5% to $42.63, and Bank of America (BAC) rose 1.7% to $10.92.

Bank of America, JPMorgan and three other U.S. mortgage servicers were involved in the talks over the foreclosure settlement, which may exceed $20 billion, Bloomberg News said.

Separately, JPMorgan was ordered to pay more than $210 million to settle allegations that employees participated in a bid-rigging scheme for derivatives sold to municipalities and nonprofit organizations.

Twenty-six of the 30 Dow stocks were higher, led by Cisco Systems (CSCO), up 2.2% to $15.90. The laggard was Pfizer (PFE), down 2.7% to $20.23. IBM (IBM) fell 0.7% to $176.48 after a downgrade to neutral from buy from Davenport & Co.

A total of 447 S&P 500 stocks were higher. The leader was chip-equipment maker KLA Tencor (KLAC), up 7% to $42.53. The stock was upgraded today by UBS analyst Stephen Chin, who said sales should rise when the chip market bottoms next year.

Murdoch shuts down News of the World
Rupert Murdoch's News Corp. (NWSA) announced today it was shutting down its News of the World tabloid newspaper in London with Sunday's edition.

The tabloid has been at the center of an ugly phone-hacking scandal. The paper had  offended the British public by hacking into the cellphone voicemail of a missing teenage girl, possibly interfering with the police investigation into her murder. Later, there were allegations that relatives of soldiers slain in Afghanistan and families of victims of London's 2005 terror attacks were targeted.

Many large advertisers had withdrawn ads to protest the paper's intrusions of privacy.

News Corp. shares closed down 0.2% to $17.43 today. Shares are up 20% this year but down 25% from their 2007 peak.

Short hits from the markets -- New York close



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Jul 7, 2011 2:04PM

Can hardly believe that people were actually starting to buy things and get the economy started given that the price of gasoline dropped substantially over the past month!  I think a 5 year old could make that why can't the government see that and put an end to speculators driving up the cost of oil/gasoline and actually allow the economy to have a chance?!?

Jul 7, 2011 3:14PM
 All I see in the unemployment dropping is more people having it run out.
Jul 7, 2011 1:49PM
I guess the more time that passes, the more people that fall off the un-employment rolls.

When this market goes, its gonna pop like a frog on a hotplate. Then all h#ll will break loose.

Jul 7, 2011 1:51PM
good to see fuel prices are on the rise again. i was just getting enough extra money to buy some bubble gum!!!
Jul 7, 2011 3:06PM
You can bankrupt the top 50 richest people in the world and you would be able to operate this country for approximately 41 days

I guess you have to tax the rich - they have all the money!  Past 25 years they have managed, through reduced tax rates, to increase their share. also coincental with the increase in the deficit.


The increase in the wealthiest 1% share of the national wealth is directly proportional to the reduction in the capital gains tax rates since the mid-80's. Fact.

Jul 7, 2011 5:38PM
Here we go again with the Big Oil Game as it is headed once again for $100 a barrel. It is a darn shame that the fate of our economy lies in the hands of Greedy and Ruthless oil speculators. It is time to pass laws to make these people take physical delivery of the millions of futures that they buy electronically and pay for storage, etc, then see how many they buy ahead. Better then that, take Crude oil out of the commodity market and the problem would be solved. It is too bad that many of our elected officials are in bed with Big Oil. These people are stealing from all of us and are stealing our children's future as they are making a killing on oil.  This country does not stand much of a chance with these Greedy Pigs at the wheel.
Hello $5 dollars a gallon gas folks. Oil is going back up faster than it came down. Fill up your tanks as next week the price will be 20 cents a gallon higher.

Benchmark oil for August delivery rose $1.88 to $98.53 a barrel in afternoon trading on the New York Mercantile Exchange. Brent crude gained $4.07 to $117.69 per barrel on the ICE Futures exchange.

Jul 7, 2011 4:39PM
No one is saying penalize the rich, rather we are saying it should be a shared burden. However, the Republican Party is saying only the middle class will continue to bear the burden alone. And the rich and oil companies, who paid little or no taxes throughout 8 years of the Bush Administration and nothing during the past two years, should continue to cruise along with no taxes and subsidized lifestyles, while the rest of us pay through our noses.
Jul 7, 2011 5:55PM
Can it get any worse??????  Yes  it will .....
Jul 7, 2011 8:47PM
Like the elderly gentleman below, I too have paid into Social Security since I was 14 years old.  I have paid into Medicare since it was enacted by LBJ.  Unfortunately, those of us who are very Senior earned our monies at a much lower income rate than the significant inflated wage schedules of the younger generation.  We live on a lower base fixed income, and now are subject to the improper calculations of government inflation.  We deserve an increase so we can meet needs for food, shelter, gas.  Let us hope the Markets continue to rise in this incredible period of excess spending, still responsive to the younger generation's instant action culture.
Jul 7, 2011 3:45PM

We are a bunch of blind Rubes; anyone notice the Gas Pump Price fluctuation during the last two "Holiday" weekends? The price drops for 5 days straight prior to the start of the weekend, then 2 days later, it has increased by 5 to 10 cents per gallon.


Vacationers decide that due to the price drop they will go ahead and drive to the lake or grandma's for the 3 day weekend, then when they turn around to go home on the last day, find the price is up and they have no choice but pay the inflated cost. Sucker punched again. Wait for Labor day, and see if history does not repeat itself...   

Jul 7, 2011 3:00PM

That's the problem, the economic cycle is broken.  Retail gets a lift, but our own manufacturing doesn't as much of the retail lift is from goods produced in other countries. 


CYCLE:      Demand caused by decent wage and employed folks and ability to take loans/subsidies as well --> Manufactures enter or stay in business boost production --> Products are shipped to retailers which are sold: Repeat.


New CYCLE:   Demand caused by wages etc.. ---> goods ship to retailers from other nations ---> manufacturing goes down ---> Jobs lost and wages go down---> Demand goes down repeat.  Its like a grave yard spiral.    We need to see real goods being made here increase.

Jul 7, 2011 5:45PM
Crude moves higher; pump prices on the rise
Does this surprise anyone?
Jul 7, 2011 2:06PM
It doesn't matter who's in the White House or Congress, both parties are beholding to special interest groups. Obama talk's tough on going after oil speculators, but him and his people do nothing about it. Coincidentally, President Obama was the biggest recepient of contributions from BP corporation. Until we come up with some new election system that stops any contribution from anyone, and gives every candidate an equal amount to get their message out, we will be at the mercy of all these power hungry and greedy politicians. As a lifelong democrat I'm disgusted by the whole system and maybe a little more by the republicans. I believe the republican party is trying to eliminate the middle class and make the U.S. a two class society, super rich and poor.
Jul 7, 2011 3:48PM

Many of the  super rich have gamed the system to make themselves billionaires.  Even some of the not so super rich have benefited from the generous tax loopholes and government

programs to gain their wealth.  Some may have actually cheated a little. Us average guys have not had that or been able to afford to take advantage of these "benefits".  Maybe it is time we gamed their system by taxing them just a little bit more.   It is pay back time.


2 Dems, 2 republicans.  Good to know that both sides are solidly represented here.


OOP's must be in a solid red state.


Go Blue.

Jul 7, 2011 4:31PM
Its not surprising that certain Retailers have gains.  WAKE UP!!! THEY HAVE STORES IN CHINA AND OTHER COUNTRIES OVERSEAS THAT ACTUALLY HAVE A THRIVING MIDDLE CLASS THAT SPENDS MONEY.  Its unfair to misrepresent info that suggests that Americans are spending, we are not.  Tourism  is way up.  We have lots of visitors from other countries spending money here also.  I DON'T ADVOCATE TAXING ALL THE RICH.  JUST THE RICH IN THIS COUNTRY WHO MAKE THEIR WEALTH WITH OVERSEAS WORKERS.  This country wants a Global Economy than that should include everything INCLUDING GLOBAL TAXATION.  Then we shall see how quickly factories start opening up here.  Otherwise the rich will have to move to Mexico or elsewhere and risk getting their heads chopped off by criminals.  I don't think so because they LOVE LIVING HERE JUST DON'T FEEL THEY HAVE TO BE LOYAL WERE MONEY IS INVOLVED. 
Jul 7, 2011 5:04PM
I'd like to know where the lower gas prices are, here in west Michigan we have seen our gas prices go up 39 cents a gallon to 3.96 this week.
Jul 7, 2011 5:00PM

"Just returned from a trip to the Northeast and Quebec Canada.  Came down with a sore throat, stuffy nose and bad cough all at the same time. I spoke with the hotel front desk and they advised I go to the hospital.  I thought oh oh I am an american citizen who will not be covered by my insurance.  Saw two doctors, had a chest x-ray in case of pneumonia, had two scripts filled in the hospital.  NO CHARGE!!! universal healthcare.  How can you do it I asked.  Gasoline $1.35 per liter, works out to about $5.30 per gallon.  Wine or hard liquor about $10.00 per drink.  Tobacco, mostly cigarettes about $8.50 a pack. Hotel tax, restaurant tax and clothing tax pays the greater share of ancillary taxes.  Hotels full, restaurants full and retailers are setting record sales.  My, My and the exchange rate is about 2 cents higher than our dollar."


57% of every dollar taxed. Quebec is a tourist destination. Restaurants are filled with wealthy tourists, not locals.


Jul 7, 2011 8:36PM

Rational, they will go the moment I have to pay more...  They will pay every cent, as long as I own the business...  I will NEVER take a dime less. 


Only idiots think government SPENDING creates demand.  Government first,MUST take any amount they SPEND out  of the economy.  This is done by taxing, debasing, or borrowing.


No amount of government spending will create propsperity. 


You cannot Borrow, Tax, Debase or SPEND your way to prosperity not matter what "57 states and the Donkeys that follow him say...

Jul 7, 2011 4:38PM

cas 1981,


If what you say is true then it really doesn't matter if you are rich or not.  It sounds as if you have

made your way with hard work and honesty.  If you net worth is over $ 5,000.000 then I would

consider you wealthy.  For some you would be just middle class.  It all depends on who is

judging you. 


Often a persons net worth is not measured in $. Even in todays world where people are

driven by greed and consumption there are still people who believe in the old fashion

way.  They earn it and not just money.  Respect and love still matter to some people and families.




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