US open: Stocks gain on better-than-expected private payrolls report

US stocks gained on Wednesday as data showed private sector employment rose more than expected in July.

At 1526 BST the Dow Jones Industrial Average increased 0.10%, the S&P 500 grew 0.05% and the Nasdaq edged up 0.11%.

Employers added 179,000 jobs last month, beating expectations for a 170,000 jump, the ADP revealed. It was driven by an increase in mid-sized-business jobs

The June figure was revised up to show that 176,000 jobs had been added versus 172,000 previously.

The figures came ahead of Friday's all-important non-farm payrolls report.

David Morrison, senior market strategist at SpreadCo, said: “This was good news as far as investors were concerned, but it doesn’t necessarily mean that we’re set for a strong non-farm payroll number on Friday.

“Analysts are generally wary of taking the ADP data as a heads-up for non-farm payrolls as the latter tends to be much more volatile than the ADP release. This has certainly been the case over the last few months. But the other issue is that the next Fed meeting isn’t until 20/21st September. Not only will July’s employment data be old news by then, but the market already doubts that the Fed will tighten monetary policy this year, let alone ahead of November’s presidential election.”

Another report showed the US services sector expanded at a sluggish pace last month, albeit faster-than-expected.

Markit’s final US business services purchasing managers’ index was unchanged at 51.4 in July, but up from the flash estimate of 50.9, indicating only a very modest expansion. A reading above 50 indicates expansion. Economists had been expecting a reading of 51.0.

Separately, the Institute for Supply Management’s index of non-manufacturing activity fell to 55.5 in July from 56.5 in June, missing expectations for a reading of 56.0.

On the corporate front, Time Warner shares rose on news it is buying a 10% stake in web TV service Hulu.

Kate Spade plunged after reporting quarterly profit that trailed analysts’ estimates and cutting its full year earnings forecast.

Office Depot rallied as the company swung to a quarterly profit and said it would close 300 stores in the next three years to cut costs.

FitBit surged after it released better-than-expected second-quarter earnings late on Tuesday.

Etsy was also on the front foot after the online marketplace posted a wider loss for the second quarter on Tuesday but a rise in revenue and users.