Sept. 5 - Summary: Stocks rally for day No. 3, yields on 10-year note hover near 3 percent; Services sector, hiring show strength in August; JP Morgan exiting student loan business -exclusive. Conway G. Gittens reports.
Wall Street enjoys a three-day bounce as the U.S. economy shows signs of renewed strength. But gains for the stock market were not as buoyant thanks to what's been happening in the bond market. The yield on the 10-year note is just under 3 percent for the first time since July 2011. Economic strength is showing up in the vast services sector. That section of the economy which includes everything from retail to banking to restaurant expanded in August at the fastest pace since the end of 2005. Separately, hiring by private employers rose by 176,000 in August, down a little from the prior month, in a survey by payroll company ADP. And jobless claims dropped to a near five-year low, says the Labor Department. But the economy's upward climb continues to be rocky. Private data show a resurgence in corporate layoff announcements in August, and factory orders stumbled at the start of the third quarter. Mixed signals mean investors will be looking for clarity from Friday's jobs report. Max Wolff of ZT Wealth: SOUNDBITE: MAX WOLFF, CHIEF ECONOMIST/CHIEF STRATEGIST, ZT WEALTH (ENGLISH) SAYING: "I'll be looking very closely at the government sector employment to see if it tanked again. We sort of hoped that it wouldn't since it has been falling quite a bit. The numbers will matter the more off consensus they are but they are always important. If we come in below 150,000-160,000 it would be a real question mark about tapering, because it would signal significant weakness." But as of now, there's some expectation the Fed will announce it will taper, or slow, monthly bond purchases in September. Rounding up the day's corporate headlines - JP Morgan is getting out of the student loan business. According to a memo, America's top bank will stop making student loans in October because the business is no longer profitable. August sales at Costco were stronger than expected. The warehouse retailer faring better than many during the key back-to-school shopping season. Other retailers relied heavily on discounts to get merchandise out the door. Heads of State from the world's leading 20 economies descended on Russia for meetings - as for European markets - stocks rallied as official rates stay low in the euro zone and the U.K.