Wall Street Ends Higher on Service Sector Report

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Wall Street Ends Higher on Service Sector Report

US stocks ended higher for the first time in four sessions in a choppy trading session on data showing that the pace of growth in the Service sector in the US rose to a decade high in July.

The Dow Jones Industrial Average suffered the most volatile action during the session after weak Disney and Energy shares weighed it down. The blue chip index ended down 1.22 points or 0.1% at 17,540.70 after paring early morning gains.

The S&P 500 Index ended 6.52 points or 0.32% higher at 2,099.84 points after gaining more than 19 points earlier.

The tech heavy Nasdaq Composite jumped 34.40 points or 0.7% to end at 5,139.44 points.

“The market has been under a little bit of pressure looking for a reason to go back up,” John Manley, who helps oversee about $233 billion as chief equity strategist for Wells Fargo Funds Management in New York, told Bloomberg.

“The market’s moving in the right direction. A slow, steady recovery is probably a good thing. The single most important factor affecting stock markets is what the Fed is doing.”

Data by the US Institute of for supply management showed that the service sector index for July jumped top 60.3, its biggest reading since August 2005, beating the consensus estimate of analysts polled by Reuters who had predicted a growth by 56.2.

The data was in line with market expectations though with most traders expecting the Federal Reserve to raise the interest rates in September.

“It seems as though the September hike is coming back into the picture,” Stephen Parker, head of global equity solutions at J.P. Morgan Private Bank, told the Wall Street Journal.

“The Fed will raise rates based on broader strength in the economy and that’s a good thing for stocks,” he added.

Hopes that the money policy would remain loose for longer were however supported by Federal; Reserve Governor Jerome Powell who said in an interview that he was undecided on whether or not to support a rate hike when the Federal Reserve meets in September for their policy meeting.

To contact the reporter of the story: Samuel Rae at samuel@forexminute.com