FOX Business: The Power to Prosper

Wall Street pushed its way to fresh two-year highs on Wednesday as an early slide fueled by a stronger dollar was wiped away by new signs the U.S. economic recovery gained steam at the end of 2010.

Today's Markets

The Dow Jones Industrial Average rose 31.71 points, or 0.27%, to 11722.89, the Standard & Poor's 500 gained 6.36 points, or 0.50%, to 1276.56 and the Nasdaq Composite jumped 20.95 points, or 0.78%, to 2702.20. The FOX 50 gained 4.32 points, or 0.47%, to 915.17.

The latest burst of buying was triggered by  reports showing employers added almost 300,000 private-sector jobs in December -- tripling estimates from economists -- and the U.S. service sector expanded at its fastest pace in four years. 

“I think it’s just further confirmation that the economy is on much firmer footing than just a few months ago. Things are turning around and looking better,” said Ryan Detrick, equities analyst at Schaeffer’s Investment Research.

However, the rally was muted and didn't begin until midday because of the soaring greenback, weakness from retailers like Family Dollar (NYSE:FDO) and some skepticism about the accuracy of the private-sector jobs report. 

Still, the blue chips managed to rally for the fourth day in a row and close in territory unseen since August 2008. Most Dow stocks made headway, led by Walt Disney (NYSE:DIS) and American Express (NYSE:AXP). The index's weakest links were Intel (NASDAQ:INTC) and Wal-Mart (NYSE:WMT).

The Nasdaq Composite enjoyed stronger gains as tech stock such as Adobe (NASDAQ:ADBE) and Qualcomm (NASDAQ:QCOM) rallied.

ADP Boosts Jobs Hopes

All eyes were on the jobs picture Wednesday after ADP said private-sector employers added 297,000 jobs in December, blowing away forecasts for a rise of just 100,000 and marking the best reading in the report's nine-year history. Service-providing sector jobs led the way, surging by 270,000, while small businesses also added a whopping 117,000 jobs.

“This is unquestionably a positive for the economy, the labor market, income growth and risk assets,” Dan Greenhaus, chief economist strategist at Miller Tabak, wrote in a note.

Some analysts said the report could mark a turning point in the U.S.'s disappointing labor comeback from the Great Recession. ADP cited greater confidence about the business environment in the wake of the extension of the Bush tax cuts last month. 

At the same time, the ADP report is an important prelude to the more closely-watched government jobs report on Friday, which will now have even higher expectations on Wall Street. That jobs report is expected to show nonfarm payrolls grew by 175,000 in December and the unemployment rate inched lower to 9.7%.

Wall Street also cheered the Institute for Supply Management's strongest service-sector report since August 2005. The index climbed in December to 57.1, up from 55 in November and above forecasts for a rise to 55.6. However, the employment index slid in December from 52.7 to just 50.5. A reading above 50 indicates expansion.

The bulls also benefited from a turnaround in the commodities complex as crude oil surged more than $2 off session lows to close at $90.30, up 92 cents a barrel, or 1.03%. Selling of gold eased after Tuesday's plunge as the precious metal fell $5.10 a troy ounce, or 0.37%, to $1,373.40.

U.S. stocks were held back earlier by the currency picture as the euro tumbled by as much as 1.3% before paring its losses. The euro fell as the Swiss National Bank said it won’t accept debt from Ireland’s banks as collateral and Portugal sold debt at a sharply higher yield. A weaker euro/stronger dollar tends to hurt stocks because it puts pressure on commodities and U.S. exports.

Consumer discretionary stocks managed to shrug off disappointing news about a pair of retailers. Family Dollar plunged almost 9% after it missed estimates with a quarterly profit of 58 cents a share and issued a gloomy guidance for the current quarter. Also, BJ's Wholesale (NYSE:BJS) slumped 2% in the wake of posting weaker-than-expected December sales growth and announcing plans to shut down five stores.

On the upside, ComScore said U.S. online holiday shopping sales hit an all-time record of $32.6 billion, up 12% from a year ago.

Corporate Movers

Goldman Sachs’s (NSYE:GS) apparent $450 million investment in Facebook is “not a done deal” yet, sources told FOX Business’s Charles Gasparino. Wall Street execs see a 50/50 chance of the deal getting nixed. The Securities and Exchange Commission is looking into whether part of the deal may allow Facebook to skirt a rule mandating additional financial transparency if it has over 499 investors.

Qualcomm (NASDAQ) launched a bid to acquire Atheros (NASDAQ:ATHR) for $3.1 billion in cash. The $45-a-share deal places a 21.6% premium on Atheros, which makes chips for Bluetooth wireless and GPS devices. Shares of Atheros saw a modest gain because they ran up on a report of a possible bid on Tuesday.

J. Crew (NYSE:JCG) closed up 2% after Bloomberg News reported Sears (NASDAQ:SHLD) and Urban Outfitters (NASDAQ:URBN) were mulling rival bids for the clothing retailer. J. Crew has already agreed to a $3 billion leveraged buyout from Leonard Green and TPG Partners. At least two other private-equity firms are also receiving confidential data on J. Crew, Bloomberg reported. J. Crew's window to accept a competing bid ends on January 15. 

Global Markets

Germany's DAX fell 0.51% to 6939.82, France's CAC 40 dropped 0.29% to 3904.61 and the U.K.'s FTSE 100 gained 0.50% to 6043.86. 

In Asia, Japan's Nikkei 225 slipped 0.17% to 10380.80, Hong Kong's Hang Seng climbed 0.38% to 23757.80 and China's Shanghai Composite declined 0.49% to 2838.59.