Stock Market News for July 2, 2009

On Wednesday, US stocks opened the third quarter with a sharp rally but the averages finished well off session highs as caution prevailed ahead of Thursday’s jobs report.  The markets opened strongly with the Dow Jones industrial average shooting up 133 points before paring some gains to close up 57 points, or 0.7%, to 8,504.06.  The Nasdaq added 11 points, or 0.6%, to 1,845.72 and the broader S&P 500 index edged up 4 points, or 0.4%, to 923.33.  A better-than-expected report on Chinese manufacturing and General Mills’ (NYSE:GIS - Analyst Report) solid quarterly earnings also helped sentiments on the Street as investors shrugged off a report from ADP which showed companies in the US cut 473,000 jobs in June.  

US stocks had declined Tuesday after an unexpected decline in consumer confidence sparked a sell off, but the S&P 500 index managed to end the quarter with a 15.2% gain, its best quarterly performance in a decade.  Volume was markedly low with only 948 million shares trading.  Advancing stocks beat decliners by a three to one margin.  The CBOE Vix, the measure of market volatility, eased 0.5% to 26.22.  Thursday, markets will turn their focus towards the employment scenario, as the Labor Department releases its June jobs report.   

Among ten S&P industry groupings, eight moved higher while financials and healthcare stocks led on the downside.  Shares of consumer-related companies led with modest gains of 1.9% while utilities added 1.4%.  On the DJIA, Kraft (NYSE:KFT - Analyst Report) jumped 5%, the most since December, after rival General Mills (NYSE:GIS - Analyst Report) reported better-than-expected fiscal fourth quarter earnings on strong sales of its cereal and dough products and upbeat yearly guidance. Yum! Brands Inc. (NYSE:YUM - Analyst Report) surged 5% after it was recommended by Goldman Sachs (NYSE:GS - Analyst Report).  Intel (NASDAQ:INTC - Analyst Report) added 3% after it was upgraded to "market perform" from "market underperform." On the downside, shares of Bank of America (NYSE:BAC - Analyst Report), American Express (NYSE:AXP - Analyst Report) and JP Morgan (NYSE:JPM - Analyst Report) moved lower, declining at least 1.0%.  Shares of Chevron Corp (NYSE:CVX - Analyst Report) rose 0.4 percent to $66.52, while Exxon Mobil (NYSE:XOM - Analyst Report) added almost 1 percent to $70.56.

Although the attention will be on today’s jobs report, weekly jobless claims and factory orders are also likely to draw attention. ECB President Trichet's comments will be scoured for any change in plans to increase asset purchases, although interest rate levels as expected to have remained unchanged.