Stocks rallied on Thursday, with the Nasdaq up for an eighth straight day, as strong labor market and retail sales data lifted optimism a day before the U.S. employment report for June.
Data from payrolls processor ADP showing U.S. private hiring increased by more than double expectations, coupled with a fall in new claims for jobless benefits, raised hopes that a recent slowdown in the economy may only be temporary.
The reports also fueled speculation that Friday's non-farm payrolls report from the Labor Department would provide more evidence of an improving labor market, a key factor if markets are to rally into the end of the year.
We went through a multi-month period of disappointing data, and now it is coming in better than anticipated, and that reset of expectations is providing a nice tail wind to markets, said Gary Flam, portfolio manager at Bel Air Investment Advisors in Los Angeles.
The Dow Jones industrial average <.DJI> was up 103.31 points, or 0.82 percent, at 12,729.33. The Standard & Poor's 500 Index <.SPX> was up 14.42 points, or 1.08 percent, at 1,353.64. The Nasdaq Composite Index <.IXIC> was up 40.18 points, or 1.42 percent, at 2,874.20.
However, Flam said a pullback was possible as the market digested recent gains. Both the Dow and S&P are up 6.7 percent since June 24, while the Nasdaq is up 8.4 percent in an uninterrupted rally.
The S&P 500 is likely to run into strong resistance around current levels, according to technical analysts at UBS.
Failure to break out above major supply will promptly lead to a near-term trading range between 1,258-1,263 and 1,340-1,345, the analysts wrote in a research note.
Retailers were among the best performers after several top companies reported better-than-expected sales gains for June, using bargains to lure shoppers in an uncertain economy.
Employers are expected to have created 90,000 jobs in June, according to a poll of economists by Reuters.
The ADP report showed the private sector added 157,000 jobs last month, exceeding expectations for a gain of 68,000.
Major brokerages raised their price targets on Visa Inc
Capital One Financial Corp
There were some glimmers of a potential compromise that would avoid a debt default as President Barack Obama and top congressional leaders searched for ways to break a deadlock over spending and taxes.
However, a small team of U.S. Treasury officials is discussing options to stave off default if Congress fails to raise the country's borrowing limit by an August 2 deadline, sources familiar with the matter said on Wednesday.
(Editing by Kenneth Barry)