Bulls Charge After Jobs, Retail Sales Data Boost Sentiment

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Encouraging data on the labor market and retail sector stoked traders' confidence in the economic recovery, propelling the markets far into the green.

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Today's Markets

The Dow Jones Industrial Average rose 93.5 points, or 0.74%, to 12,719, the S&P 500 climbed 14 points, or 1.1%, to 1,353 and the Nasdaq Composite rallied 38.6 points, or 1.4%, to 2,873. The FOX 50 gained 8.1 points to 946.

The Nasdaq has soared 8.3% over the last eight days -- the best eight-day run in two years.

The private sector tacked on 157,000 jobs last month, according to the ADP Employment Report.  Wall Street had been looking for a much smaller increase of 68,000 jobs.  Small businesses led the increase, adding 88,000 jobs, while large and medium sized businesses combined attributed 69,000 jobs.

First time claims for unemployment benefits fell to 418,000 from a revised 432,000 the prior week.  Economists forecast claims to have fallen to 420,000 for the week.

Both reports lead up to the closely-followed release of the monthly employment situation from the Labor Department on Friday.  Economists predict the unemployment rate will remain steady at 9.1% as the economy adds 90,000 jobs.

The jobs market was hit hard during the economic downturn, with the unemployment rate peaking at 10.1% in October 2009.  The pace of recovery has been slow, and recent shocks caused by high energy prices and layoffs caused by manufacturing slowdowns related to the earthquake that slammed Japan have put additional pressure on the labor market, many analysts say.

Sales by retailers like wholesale club Costco (NASDAQ:COST) and high-end clothing store Saks (NYSE:SKS) largely topped analysts forecasts. On the whole, major stores posted a 6.9% year-to-year gain in June, according to statistics compiled by International Council of Shopping Centers.

"This is a good report since it clearly indicates that chain store retailers are benefiting from falling gasoline prices," wrote Chris Christopher, senior principal economist at IHS Global Insight, in a research note.

"Many retailers were offering lower prices to lure shoppers into their stores it seems to have worked."

Gains in energy markets heated up, with gasoline and oil settling at the highest levels in three weeks, amid hopes a more robust economic recovery will mean increasing demand for energy.

Crude stocks fell 889,000 barrels last week, short of the 2.3 million barrel draw analysts estimated.  However, gasoline inventories were down 634,000 barrels, opposed to forecasts of a 100,000 barrel build.  Lower levels of supply can push prices higher.

Light, sweet crude gained $2.02, or 2.1%, to $98.67 a barrel.  Wholesale RBOB gasoline soared 13 cents, or 4.3%, to $3.13 a gallon.

Prices at the pump have been ticking higher over the last two days.  A gallon of regular gasoline costs $3.58 on average nationwide, lower than $3.76 last month, but well above the $2.72 drivers paid last year, according to the AAA Fuel Gauge report.

In metals, gold climbed $1.40, or 0.09%, to $1,531 a troy ounce.  Silver jumped 62 cents, or 1.7%, to $36.54.

The European Central Bank boosted interest rates by 0.25% to 1.5% as was expected, as it works to keep inflation in check.  The Bank of England, however, held rates steady. While higher rates help reduce inflation, they can also slow down economic expansion.

The euro gained 0.27% against the U.S. dollar and the greenback fell 0.1% against a basket of world currencies.

Corporate News

Retail sales...

Target (NYSE:TGT) said its sales in stores open at least a year were up 4.5%, also beating forecasts of 3.2%.

Costco Wholesale (NASDAQ:COST) posted a 14% jump in same-store-sales last month, topping estimates of a 12.7% increase.

Macy's (NYSE:M) same-store-sales climbed 6.7%, a better reading than the 5.1% analysts expected.

Elsewhere in corporate news...

NYSE Euronext (NYSE:NYX) shareholders approved a merger with Deutsche Boerse, a critical step in seeing the takeover over the parent of the New York Stock Exchange come to fruition.

News Corp. (NYSE:NWS) said Sunday will be the final edition of the News of the World British tabloid, which has been at the center of a hacking scandal in the U.K. News Corp. is the parent of a slew of media companies, including the FOX Business Network and FOXBusiness.com.

Apple (NASDAQ:AAPL) said its App Store downloads have topped 15 billion, and it has paid developers over $2.5 billion to date.

eBay (NASDAQ:EBAY) acquired payment processor Zong for roughly $240 million in cash.

Foreign Markets

The English FTSE 100 gained 0.92% to 6,058, the French CAC 40 climbed 0.6% to 3,985 and the German DAX rose 0.59% to 7,475,

In Asia, the Japanese Nikkei 225 fell 0.11% to 10,071. The Chinese Hang Seng edged higher by 0.06% to 22,530.

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