Upbeat Opening Act to Wall Street’s 3Q

Wall Street kicked off the third quarter on a positive note Wednesday as stocks advanced even though the latest economic gauges raised more questions about the timing and strength of a possible second-half recovery than they answered.
Reassuring manufacturing data from China, Europe and the United States reinforced hopes that the world's economy is on the road to recovery.

"We think the economy has bottomed out and we'll see some positive GDP this quarter," said Maury Fertig, chief investment officer of Relative Value Partners in Northbrook, Illinois. "The one thing that really give us a lot of comfort is a tremendous improvement in the credit markets."

Today’s Markets
The Dow Jones Industrial Average rose 57.06 points, or 0.68%, to 8504.06, the Standard & Poor's 500 added 4.01 points, or 0.44%, to 923.33 and the Nasdaq Composite picked up 10.68 points, or 0.58%, to 1845.72.

Lower Volume
On the New York Stock Exchange, only about 950.1 million shares changed hands, way below last year's estimated daily average of 1.49 billion, while on the Nasdaq, about 2.11billion shares traded, also below last year's daily average of2.28 billion.

While the markets closed comfortably in the green, they ended well off their highs, drifting lower throughout the afternoon. Some traders scratched their heads over Wednesday's gains as the new reports were hardly all positive, revealing private employers cut another 473,000 jobs last month as the manufacturing sector recovered by less than expected and home sales grew at a glacial pace.

Even so, volume was light because of the absence of most market players in a holiday-shortened week. U.S. financial markets will be closed on Friday for the U.S. Independence Day holiday.

But with the release of the all-important June non-farm payrolls data just a day away, some caution prevailed, causing indexes to finish sharply off their highs.

In the latest readings on the global economy, surveys from Europe showed manufacturing was shrinking less than initially thought and in China's case, growing modestly.

A day after stock markets around world wrapped up their best quarter in a decade, investors plowed new money into equities, boosting growth-sensitive sectors like energy, industrials, technology and materials, among other areas.

Upbeat U.S., Chinese and European manufacturing data on Wednesday helped boost global stocks and commodity prices, except for oil, while safe-haven assets like the U.S. dollar and government bonds fell.

The dollar extended declines after a report said China has asked to debate proposals for a new global reserve currency at next week's Group of Eight summit in Italy, G8 sources said.

Also on Wednesday, oil prices fell after government data showed a rise in U.S. gasoline inventories ahead of the July 4 Independence Day holiday, traditionally the peak of the U.S. summer driving season.

But reassuring data from the United States, China and Europe signaled to many investors that the global economy, shackled by a deep recession, is on the road to recovery.