With traders reacting positively to the latest batch of economic data, stocks turned in a strong performance during trading on Wednesday. The upward move on the day came after the markets experienced choppy trading in the previous session.
The major averages ended the session off their best levels of the day but still closed firmly in positive territory. The Dow rose 83.55 points or 0.7 percent to 12,716.46, the Nasdaq jumped 34.43 points or 1.2 percent to 2,848.27 and the S&P 500 advanced 11.67 points or 0.9 percent to 1,324.08.
The strong gain on the day extended a recent upward move by the tech-heavy Nasdaq, which reached its best closing level in over six months.
The strength on Wall Street was partly due to the release of a report from payroll processor ADP showing a continued increase in private sector employment in the month of January.
ADP said employment in the non-farm private business sector rose by 170,000 jobs in January following a revised increase of 292,000 jobs in December.
A separate report from the Institute for Supply Management showing a continued expansion in manufacturing activity in the month of January also generated buying interest, with the index of activity in the sector reaching a seven-month high.
The ISM said its purchasing managers index rose to 54.1 in January from a revised 53.1 in December, with a reading above 50 indicating growth in the manufacturing sector.
The release of the ISM report on U.S. manufacturing also came after the release of separate reports showing expansions in manufacturing activity in both Germany and China.
Additionally, the Commerce Department released a report showing a much bigger than expected increase in U.S. construction spending in the month of December.
Positive sentiment was also generated by reports that social networking site Facebook may soon file paperwork for a $5 billion initial public offering. Morgan Stanley (MS), which was reportedly selected as the lead underwriter for the offering, rose by 4 percent on the day.
Shares of Whirlpool (WHR) also moved sharply higher after the appliance maker forecast 2012 earnings above analyst estimates. Whirlpool jumped by 13.5 percent to a five-month closing high.
On the other hand, online retailer Amazon.com (AMZN) came under pressure after reporting weaker than expected fourth quarter sales and providing disappointing guidance.
Sector News
Most of the major sectors moved to the upside on the day, reflecting broad based buying interest. Electronic storage stocks posted particularly strong gains, driving the NYSE Arca Disk Drive Index up by 6.3 percent to its best closing level in over six months.
Seagate Technology (STX) helped to lead the storage sector higher, with the hard drive maker surging up by 20.8 percent on the day. The gain by Seagate came after the company reported stronger than expected second quarter earnings growth amid significant improvements in revenues and margins.
Considerable strength also emerged among health insurance stocks, as reflected by the 2.9 percent gain posted by the Morgan Stanley Healthcare Payor Index. Strong gains by Coventry Health Care (CVH) and WellCare Health Plans (WCG) helped to lift the index to a record closing high.
Steel stocks also saw significant strength on the day, benefiting from the upbeat manufacturing data from around the globe. The NYSE Arca Steel Index advanced by 2.5 percent amid standout gains by Gerdau (GGB) and Quanex (NX).
Biotechnology, semiconductor, healthcare provider, and brokerage stocks also posted notable gains amid the broad based buying interest.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance on Wednesday. While Japan's Nikkei 225 Index edged up by 0.1 percent, Hong Kong's Hang Seng Index dipped by 0.3 percent.
Meanwhile, the major European markets all showed notable moves to the upside on the day. The U.K.'s FTSE 100 Index jumped by 1.9 percent, while the French CAC 40 Index and the German DAX Index surged up by 2.1 percent and 2.4 percent, respectively.
In the bond market, treasuries gave back some ground after showing a strong upward move in recent sessions. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.7 basis points to 1.846 percent.
Looking Ahead
While U.S. reports on weekly jobless claims and labor productivity are likely to attract some attention on Thursday, trading activity may be somewhat subdued ahead of Friday's monthly jobs report.
Nonetheless, traders are likely to keep a close eye on remarks by Federal Reserve Chairman Ben Bernanke, who is due to testify before the House Budget Committee.
On the earnings front, Dow Chemical (DOW), Kellogg (K), Merck (MRK), and Sony (SNE) are among the companies due to report their quarterly results before the start of trading on Thursday.
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