U.S. stocks rose in thin trade on Wednesday as retailers' earnings and a report showing a slight improvement in private employment boosted optimism ahead of Friday's payrolls report.
Traders also noted many stocks have low valuations, with the S&P 500 trading at a forward price-to-earnings ratio of 12.6 versus 14.6 at the start of the year.
People still have a lot of concerns about economic growth right now and people are thinking the economy is slowing, and these numbers haven't been strong enough to disabuse anyone of that opinion, said Stephen Massocca, managing director at Wedbush Morgan in San Francisco.
On the other hand, stocks continue to be very inexpensive and if you believe 2011 earnings estimates, they are very inexpensive.
Data from the Institute for Supply Management showed the services sector grew at a faster pace than expected in July. In a separate report, payroll-processing company ADP said private employers added more jobs in July than forecast.
Friday's government report on jobs is expected to show a drop of 65,000 in July as Census jobs dried up.
The Dow Jones industrial average <.DJI> gained 44.05 points, or 0.41 percent, to 10,680.43. The Standard & Poor's 500 Index <.SPX> added 6.78 points, or 0.61 percent, to 1,127.24. The Nasdaq Composite Index <.IXIC> advanced 20.05 points, or 0.88 percent, to 2,303.57.
Priceline was the top performer in both the S&P 500 <.SPX> and the Nasdaq 100 <.NDX>.
With 80 percent of the S&P 500 companies having reported quarterly results, estimated and reported earnings growth stands at 37.3 percent for the previous quarter, up from an estimate of 27.4 percent a month ago, according to Thomson Reuters Proprietary Research.
Barnes & Noble
Shares of industry giant Amazon.com
Goldman Sachs Group Inc
Volume was light, with about 7.3 billion shares traded on the New York Stock Exchange, the American Stock Exchange and Nasdaq, well below last year's estimated daily average of 9.65 billion.
Advancing stocks handily outnumbered declining ones on the New York Stock Exchange by a ratio of nearly 3-to-1, while on the Nasdaq, two stocks rose for every one that fell.
(Reporting by Chuck Mikolajczak; Editing by Jan Paschal)