Stocks rise as employment reading shows uptick

NEW YORK — Stocks extended their rally to a second day Wednesday after an upbeat employment report from payroll company ADP made investors cautiously optimistic about the government's upcoming July employment report. The Dow Jones industrial average rose more than 100 points.

Automatic Data Processing said private sector employment rose by 9,000 during this month. After seeing jobs disappear by the thousands in recent months, the stock market is eager for any insights into the Labor Department's take on the job market on Friday.

The Federal Reserve announced it was extending its emergency borrowing program for Wall Street banks, which reassured the market that investment banks won't suffer from liquidity problems. The central bank will also now allow commercial banks to bid on cash loans that last for 84 days, besides the 28-day loans that are now available. The original program allowing investment firms to turn to the Fed for a quick source of cash will now run through Jan. 30, having been extended from mid-September.

The latest overtures from the federal government, some of which had been expected, nonetheless helped lift investor sentiment.

Meanwhile, the price of oil rose after a weekly Energy Department report on domestic supplies showed a surprise increase. Oil's sharp drop Tuesday contributed to Wall Street's huge rally; light, sweet crude rose 55 cents to $122.74 on the New York Mercantile Exchange.

Alan Levenson, chief economist at T. Rowe Price Associates Inc., said Wall Street has started interpreting recent economic data more optimistically. And the decline in oil over the past two weeks — despite the turn higher Wednesday — is making investors more comfortable about stocks. Oil has fallen more than $20 since hitting a high above $147 on July 11.

"The decline in commodity prices, particularly oil, is helpful for the U.S. consumer and therefore the U.S. economy. The drag from food and energy prices has been Public Enemy No. 1 to most consumers for much of this year," he said.

In midmorning trading, the Dow rose 102.67, or 0.90 percent, to 11,500.23. On Tuesday, the Dow rose 266 points, more than wiping out a nearly 240-point loss from the previous session.

Broader stock indicators also rose. The Standard & Poor's 500 index advanced 12.24, or 0.97 percent, to 1,275.44, and the Nasdaq composite index rose 10.88, or 0.47 percent, to 2,330.50.