The stock market was ending a painful second quarter quietly, holding onto small gains after another disappointing report on the jobs market.
Moves were modest this afternoon as financial stocks rose in response to a change in the banking overhaul bill that removed $19 billion in proposed taxes on banks. A report on manufacturing in the Midwest barely topped expectations but also gave stocks some support.
The Dow Jones industrial average rose 31 points, a day after falling 268. The other major indexes were also slightly higher.
Payroll company ADP said private employers added just 13,000 jobs in June. That’s well short of the forecast of 60,000 from economists polled by Thomson Reuters.
The weaker-than-expected jobs report is the latest in a long string of disappointing economic data that has contributed to the market’s turbulent second-quarter performance. Heading into the final day of June, the Dow was down 9.1 percent for the three-month period. Broader indexes were down 11 percent.
Sam Stovall, chief investment strategist of U.S. equity research at Standard & Poor’s, said investors are nervous.
“Basically it’s wait and see,” Stovall said. Investors are cautious leading into Friday’s jobs report from the Labor Department and upcoming earnings season, which kicks off in a couple of weeks. That has led them to sell shares, particularly in the last few days, he said.
The ADP report is often seen as a precursor to the Labor Department big monthly employment report. ADP’s data only includes jobs created by private companies so it can vary widely from the Labor Department data, which also includes government jobs.
Friday’s government report is expected to show employers cut a total of 110,000 jobs in June. However, economists predict the net loss of jobs is tied primarily to the government laying off temporary workers that were hired to work on the 2010 census.
But after the weak report from ADP, investors are concerned about the number of jobs private employers have added this month. May’s employment report showed private employers were hiring few workers.
Companies have been slow to add new jobs coming out of the recession. Consumer confidence has fallen and spending has not picked up as investors had hoped because there are still so many people out of work.
“We didn’t have the exit velocity coming out of the recession to right the ship,” a managing partner at investment bank Westwood Capital. “The question now is what’s the chance of a double-dip (recession) versus very slow growth.”
The Chicago Purchasing Managers Index, which measures midwestern manufacturing activity, fell to 59.1 in June, from 59.7 last month. That drop was just above the 59 forecast by economists. The report comes a day before the Institute for Supply Management releases its report on June manufacturing activity nationwide.
In early afternoon trading, the Dow fell 30.76, or 0.3 percent, to 9,901.06. The Standard & Poor’s 500 index rose 5.75, or 0.6 percent, to 1,046.99, while the Nasdaq composite index rose 16.40, or 0.8 percent, to 2,151.58.
About three stocks rose for every one that fell on the New York Stock Exchange, where volume came to 395.1 million shares.
Financial shares were helping the market after Democrats dropped a proposal in the financial regulation overhaul bill that would have levied $19 billion in taxes on large banks and hedge funds. That money will instead come from money generated by the bank bailout program launched during the credit crisis in late 2008.
Citigroup Inc. rose 10 cents, or 2.7 percent, to $3.83. Wells Fargo & Co. added 26 cents to $26.19, while KeyCorp rose 20 cents, or 2.6 percent, to $8.01.
Shares of European financial companies also got a boost after the European Central bank said European banks did not borrow as much through a three-month refinancing program as expected. That reassures investors that banks in Europe might not be hurting as bad from rising sovereign debt in countries like Greece, Spain and Portugal.
However, some of the gains in major European indexes were erased after the disappointing U.S. jobs report. Britain’s FTSE 100 rose 0.1 percent, Germany’s DAX index gained 0.1 percent, and France’s CAC-40 rose 0.3 percent.
Stocks have been pummeled for much of the second quarter by fears that mounting deficits in Europe would upend a recovery on that continent and eventually in other countries including the U.S.
The euro, used by 16 European Union members, has become a proxy for confidence in the continent’s economic recovery. It has dropped about 9 percent during the second quarter, but was up only slightly Wednesday at $1.2286.
As investors pulled out of stocks and fled the euro throughout the quarter, U.S. Treasurys and gold were big beneficiaries. The perceived safety of the two helped push bond and gold prices higher.
The yield on the 10-year Treasury note, which moves opposite its price, went below 3 percent for the first time in more than a year on Tuesday, falling to 2.95 percent. It budged off that low Wednesday, rising to 2.99 percent.
Gold rose $2.60 to $1,245.00 an ounce, and is up nearly 12 percent for the quarter.
The Russell 2000 index of smaller companies rose 7.28, or 1.2 percent, to 623.24.