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Stocks hold ground after ADP data

Stocks are holding their gains after private-sector payrolls matched expectations.

S&P 500 futures remain up more than 1 percent since the ADP's report, which showed 200,000 private-sector jobs were added this month. The index is stuck at the same level where it bottomed last Thursday. Most of Europe climbed over 2 percent. Tokyo led the move overnight in Asia with a 2.7 percent rally, followed by gains of about 1.4 percent in Mumbai and Hong Kong.

The next data points are the Chicago Purchasing Managers Index at 9:45 a.m. ET and crude-oil inventories at 10:30 a.m. ET.

The biggest event of the day could come at 3 p.m. ET, when Federal Reserve Chair Janet Yellen makes brief remarks at a bank-regulator conference. Investors will likely buy stocks if she suggests that an interest-rate hike is coming.

The S&P 500 eked out a small gain yesterday after bouncing slightly above last month's low. The index crashed in late August but retraced more than half the move before losing steam and rolling over.

The market has been hurt by a combination of fatigue after more than two years of upside, plus worries about economic weakness in China. Plunging oil prices have also hurt the credit market. But monetary policy appears to be the real lynchpin because higher rates would boost financial-sector earnings and give buyers a new catalyst. The bulls need that because most other groups that have led over the long run--especially health care--have been breaking down.

In another potentially important report, Chinese consumer sentiment rose to its highest level in more than a year. That follows better-than-expected European sentiment gauges and U.S. consumer confidence yesterday.

If other domestic reports like the Institute for Supply Management's manufacturing index tomorrow and monthly payrolls are strong, the Fed may have leeway to raise interest rates.

In company-specific news, Ralph Lauren gained 6 percent after its namesake founder stepped aside as CEO. EZchip is also likely to rally after accepting an $811 million takeover by Mellanox. Barracuda Networks plunged 25 percent because of weak forward guidance. Western Digital surged almost 12 percent after receiving a $3.8 billion investment by China's Tsinghua Unisplendour. There could also be attention on Apple and Google as GOOGL publicizes new devices competing with the iPhone and iPad.

Copper is the biggest-moving commodity with a 2 percent gain. Oil is fractionally lower. The U.S. dollar rose against the Japanese yen and euro. It's also noteworthy that the Australian dollar, which tends to follow sentiment toward China, is trying to rally.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Copyright © 2010 OptionMonster® Holdings, Inc. All Rights Reserved.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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