US close: Stocks cockier as jobs stats help knock rate odds

US stocks gained on Wednesday as oil prices rose and, amid a blizzard of data, lacklustre private payrolls jobs data made the chances of an interest rate hike by the Federal Reserve seem less likely.

By the closing bell the Dow Jones Industrial Average added 0.6% to 18,281.03 points, the S&P 500 increased 0.43% to 2,159.73 points and the Nasdaq Composite climbed 0.5% to 5,316.02 points.

Boosting energy stocks, oil prices were hovering back around the $50 mark after the Energy Information Administration revealed US weekly crude inventories fell by three million barrels last week to 499.7 million barrels.

On Tuesday the American Petroleum Institute said crude inventories dropped 7.6 million barrels last week. West Texas Intermediate picked up 2.2% to $49.74 per barrel and Brent Crude was 1.9% higher at $51.95 per barrel.

Earlier, private US employers added 154,000 jobs in September, according to payroll processor Automatic Data Processing and forecasting firm Moody’s Analytics, missing expectations of 165,000. The previous month was revised down to 175,000 from the initial estimate of 175,000.

The slowdown was driven by the services sector, which Barclays Research said was a concern and is a risk to its forecasts outlook for economic activity.

“However, in this instance, the slowing in services growth, relative to recent trends, is concentrated in trade, transportation, and utilities,” the bank added.

“This series tends to be related to the pace of manufacturing activity in the US. As such, the slowdown in services is likely a manifestation of a still-weak manufacturing sector rather than a change in trend in the health of services sector more generally.”

The report comes ahead of Friday’s hallowed non-farm payrolls, which is expected to show employers added 170,000 jobs in September.

Wall Street was pricing in close to a 55% chance of Fed rate hike in December, according to a gauge of federal-funds futures calculated by CME Group.

"I still don't think the Fed is going to move in November, but I think it does raise the odds for December," said David Kelly, chief global strategist at JPMorgan Funds.

"The Fed doesn't want to look political and, to raise rates so close to the election, that would be a political act. I thought they should've raised rates in September because of that reason."

Other data on the US service sector out on Wednesday showed a much greater rebound than was expected for September up to an 11-month high. The Institute for Supply Management’s index of non-manufacturing activity rose to 57.1 from 51.4 in August, comfortably beating expectations for a reading of 53.0.

This was the biggest ever one-month jump in the employment index and, economists said, pointed to better payrolls later in the quarter.

Also, US factory orders grew by 0.2% month-on-month in August to $453.1bn, according to the Commerce Department. Economists had pencilled in a drop of 0.5%.

Orders for durable goods were up 0.1% month-on-month to $227.3bn after rising 3.6% in July, beating estimates for no change.

In company news, Twitter rallied amid speculation that the social media company could consider takeover bids this week, with some rumours citing Google.

Chesapeake Energy, Chevron and Exxon advanced as the rise in oil prices boosted energy shares.

Agribusiness giant Monsanto was on the front foot after reporting better-than-expected quarterly earnings.

Goldman Sachs and the Canada Pension Plan Investment Board have bid to acquire the UK's SVG Capital, the London-listed private equity group said, only a day after it proposed winding down.

Dow Jones - Risers

Goldman Sachs Group Inc. (GS) $166.40 2.55%
Caterpillar Inc. (CAT) $89.42 2.18%
Boeing Co. (BA) $134.66 1.82%
E.I. du Pont de Nemours and Co. (DD) $68.07 1.79%
JP Morgan Chase & Co. (JPM) $67.69 1.64%
Intel Corp. (INTC) $37.99 1.20%
Chevron Corp. (CVX) $102.23 0.95%
Exxon Mobil Corp. (XOM) $86.98 0.87%
United Technologies Corp. (UTX) $102.23 0.81%
Cisco Systems Inc. (CSCO) $31.59 0.77%