U.S. Stocks Tilt Higher After Opening Drop
NEW YORK (MarketWatch) -- U.S. stocks on Wednesday posted modest gains after opening under water, with early economic data proving better than expected and helping offset heightened worries that banks would need to raise additional capital to cover prospective losses.
The Dow Jones Industrial Average rose 14.58 points to 12,417.43, with 19 of its 30 components trading higher early on.
The S&P 500 gained 1.11 points to 1,378.76, while the Nasdaq Composite climbed 6.56 points to 2,487.04.
Stocks fell on Tuesday as investors worried over the financial health of Lehman Brothers Holdings, and as Federal Reserve Chairman Ben Bernanke signaled discomfort with the U.S. dollar.
Companies in the private sector added 40,000 jobs in May, according to the ADP employment report released before Wednesday's bell. The report comes two days ahead of pivotal Labor Department data on U.S. nonfarm payrolls for May.
Adding in about 20,000 jobs typically created by government, the ADP report suggests nonfarm payrolls rose by about 60,000 in May, in contrast to a drop of 50,000 expected by Wall Street. It's worth noting that the ADP data have overshot the employment report in recent months, however.
Separately, the productivity of U.S. nonfarm businesses was revised just a bit higher in the first quarter than previously forecast. The Labor Department said productivity, defined as output per hour worked, rose at a 2.6% annual rate in the quarter, revised up from the 2.3% in estimated a month ago.
Still to come are the Institute of Supply Management's non-manufacturing index for May and weekly energy inventories data.
Bernanke also will be delivering another speech, on economic challenges, near the end of the session.
Shares of Lehman Brothers gained 0.4% in the wake of a Wall Street Journal report that the investment firm might turn to overseas investors for funding.
On the M&A front, J.M. Smucker Co. is purchasing Folgers from Procter & Gamble Co. in a deal worth $3.3 billion in stock and assumed debt.
Also making headlines, retailer Williams-Sonoma Inc. reported a 42% profit drop and cut its sales view for the year.
Trading higher, shares of Guess Inc. climbed 8% after the retailer reported a 35% profit rise and estimated annual earnings would top Wall Street forecasts.
Tibco Software Inc. saw its shares fall 9% after warning on second-quarter earnings.
European stocks dropped sharply, with the FTSE 100 losing 1.8% in London. Asia stocks ended on a mixed note overnight, with the Nikkei 225 ending up 1.6% in Tokyo while the Shanghai Composite lost 1.9%
By Kate Gibson