Stocks rise ahead of jobs report

NEW YORK (CNNMoney.com) -- Stocks rose Thursday, recovering a bit after the previous session's big selloff, but gains were limited ahead of Friday's big monthly jobs report.

The Dow Jones industrial average (up 57.88 to 13,363.35, Charts) and the broader S&P 500 (up 6.26 to 1,478.55, Charts) index both gained around 0.4 percent.

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The tech-fueled Nasdaq Composite (up 8.37 to 2,614.32, Charts) gained 0.3 percent.

Treasury prices slumped, giving a boost to the corresponding yields. The dollar declined versus the euro and gained modestly versus the yen. Oil and gold prices rose.

The major gauges had been on both sides of unchanged throughout the session as investors mulled upbeat August retail sales, volatile oil prices and the day's economic news, ahead of Friday's labor market report.

Employers are expected to have added 110,000 jobs to their payrolls in August after adding 92,000 in July.

A number that is strong, but not too strong, would be best for market participants, said Ron Kiddoo, chief investment officer at Cozad Asset Management. If the number is too strong, "it will make people think the Fed won't cut rates," he said.

Investors are looking for economic news to add to bets that the Federal Reserve can cut interest rates at its next policy meeting, and strong economic reports would seem to lessen the likelihood of the Fed stepping in. (For details, click here.)

On Thursday, the ADP employment report, which measures hiring in the private sector, showed surprisingly weak job growth, and could be a harbinger for Friday's broader national report.

But other recent economic reports were more positive, including Thursday's readings on weekly jobless claims, productivity and the services sector of the economy. (For details, click here.)

Meanwhile, another report Thursday showed a record number of homes entered the foreclosure process in the second-quarter, reflecting the ongoing problems in subprime and housing.

Market breadth was positive. On the New York Stock Exchange, winners topped losers 5 to 3 on volume of 1.28 billion shares. On the Nasdaq, advancers topped decliners 4 to 3 on volume of 1.84 billion shares.

In corporate news, Wal-Mart Stores reported that August sales at stores open a year or more, a retail measure called same-store sales, rose a better-than-expected 3.1 percent. Shares of Wal-Mart (up $0.31 to $42.76, Charts, Fortune 500), a Dow component, inched higher.

The world's largest retailer was one of many chain stores reporting strong August sales. The relative strength was a relief for investors worried that the turmoil in the housing market and spike in commodities prices would drag on consumer spending.

Coca-Cola (up $0.97 to $54.66, Charts, Fortune 500) said it will cut 100 to 125 jobs, or less than 4 percent of U.S. employees, by the end of the year as part of a broader restructuring. Shares of the Dow component rose.

Merck (up $1.07 to $50.47, Charts, Fortune 500) shares rose after the N.J. Supreme Court ruled that health insurers' lawsuits against the company - over its withdrawn painkiller Vioxx - can't be combined into a big class-action lawsuit, reversing the decision of two lower courts.

Apple (down $1.75 to $135.01, Charts, Fortune 500) CEO Steve Jobs said that the company will give a $100 credit to certain early buyers of the iPhone, after the company announced a price reduction for the product Wednesday. (For details, click here.)

Among other movers, gold prices rose, giving a lift to a variety of mining and metal stocks, including Barrick Gold (up $2.80 to $36.20, Charts) and Newmont Mining (up $1.81 to $44.10, Charts, Fortune 500).

The Amex Gold Bugs (up $22.14 to $357.27, Charts) index gained 6.6 percent.

COMEX gold for December delivery rose $13.90 to settle at $704.60 an ounce.

Thursday morning brought a number of economic reports, most of which topped the estimates of economists surveyed by Briefing.com.

The revised reading on second-quarter productivity rose to a 2.6 percent annual growth rate from an initial reading of 1.8 percent, the government reported. Meanwhile, unit-labor costs, which measure wage inflation, slowed to an annual growth rate of 1.4 percent from an initial reading of 2.1 percent.

A separate report showed a drop in weekly jobless claims last week.

The Institute for Supply Management's August report on the services sector of the economy, released after the start of trade, stood at 55.8, unchanged from the previous month and more robust than what economists were expecting.

Treasury prices slipped a bit after Wednesday's big rally, raising the yield on the 10-year note to 4.50 percent from 4.46 percent late Wednesday. Bond prices and yields move in opposite directions.

In currency trading, the dollar fell versus the euro and inched higher against the yen.

U.S. light crude oil for October delivery rose 56 cents to $76.29 a barrel on the New York Mercantile Exchange. Oil prices were volatile after the weekly inventory report showed a drop in crude supplies and a big rise in distillates, which are used to make heating oil.

Stocks slumped Wednesday after reports showed weak pending home sales, anemic private sector employment and the latest woes for the financial sector. Additionally, the Federal Reserve's 'beige book' report on the economy showed enough growth to dampen hopes that the central bank will cut interest rates later this month.

The slew of strong economic reports Thursday morning may have added to worries that the Federal Reserve will not cut interest rates, as stock investors have been betting.

The central bank said Thursday that it had added $31.25 billion of temporary reserves to the banking system in three installments. While the Fed regularly adds funds to the system, it has joined banks around the world in increasing its efforts of late, as a means of keeping liquidity flowing.

This has been both a comfort and a concern to stock investors, in that it has added to bets that the Federal Reserve won't cut interest rates but will instead help soothe credit market turmoil through these infusions.

In mid-August, the central bank cut the discount rate, which affects bank loans, by a half-percentage point, as a means of restoring stability to financial markets that had been rocked by worries about tightening credit and the subprime mortgage mess. Stock investors have been betting that the Fed will also cut the fed funds rate, a key overnight bank lending rate that affects consumer loans, when the policy-makers meet on Sept. 18.