U.S. Stocks Rally As Consumer Discretionary, Financials Gain

NEW YORK (MarketWatch) -- U.S. stocks on Wednesday shook aside earlier losses to pull higher for a second day, with consumer discretionary and financial shares pacing the gains.

"Maybe people are looking forward to a better retail sales number tomorrow -- that's a guess," said Jack Ablin, chief investment officer, Harris Private Bank, of the turn into positive territory.

The Dow Jones Industrial Average gained 72.96 points to 8,492.05, reversing course from a triple-digit slide at the session's start.

Of the blue-chip index's 30 components, 24 posted late-morning gains, with Citigroup Inc. up 5.4%.

Alcoa Inc. was the Dow's biggest laggard, recently off 5.4%.

The S&P 500 rose 10.98 points to 859.79, with financials, consumer discretionary and information technology fronting sector gains among the S&P 500 10 industry groups.

Noteworthy gainers among financial shares included commercial lender CIT Group Inc. , up 25.8%, and Genworth Financial Inc. , recently ahead 12.7%.

The Nasdaq Composite also turned higher, recently up 29.4 points to 1,479.20.

The tech sector was bolstered in part after chipmaker Marvell Technology Group Ltd. posted quartering results that beat Wall Street projections.

Shares of Marvell were lately up 18.9%.

Volume on the New York Stock Exchange topped 475 million, and advancers pulled ahead of decliners more than 3 to 2. On the Nasdaq, 327 million shares were exchanged, and advancers beat decliners 2 to 1.

Stocks had retreated after Research In Motion Ltd. cut its forecast, with the BlackBerry maker slashing its earnings and revenue targets for its fiscal third quarter one day after rival Palm Inc. issued a similar outlook. .

The ADP national employment index found the U.S. private sector shed 250,000 jobs in November, the biggest such loss in seven years. .

"These data will help further prepare the financial markets for the possibility of a weak jobs report on Friday," said Tony Crescenzi, bond market strategist at Miller Tabak & Co.

"The ADP report has underestimated job losses every single month so far this year," said Ablin.

In other data, the Labor Department said the productivity of U.S. workers was slightly stronger in the third quarter than previously reported.

And the Institute for Supply Management said nonmanufacturing sectors of the U.S. economy contracted at a record pace in November.

"Both households and businesses are deleveraging rapidly, just as banks have done over the past year, and the pull-back is sharply impacting spending and output as gauged by the sentiment indicators," said analysts at Action Economics of the ISM index, which fell to 37.3 in November.

Thornburg Mortgage Inc. said trade of its shares has been suspended on the New York Stock Exchange because of a price drop below the $1 minimum.

Oil futures tilted higher after U.S. petroleum supplies data showed an unexpected decline in inventory, with crude for January delivery up 30 cents to $47.26 a barrel on the New York Mercantile Exchange. .

Gold futures fell, with the dollar's rise curbing investor appetite for the precious metal. Gold for February delivery declined $4.8 to $778.5 an ounce on the Nymex. .

Treasurys declined, pushing yields higher, amid concerns that U.S. Treasury Secretary Henry Paulson is considering whether to ask Congress for the second installment of the $700 billion bailout package. Ten-year note yields rose 7 basis points to 2.76%. .

The dollar gained ground against the European single currency and the British pound, with the dollar index at 86.97, up from 86.555 in North American activity late Tuesday. .

Overseas, Asian stocks ended mostly higher as investors cheered the latest round of rate cuts by central banks. .

In Europe, shares fell amid further signs of economic contraction. .

By Kate Gibson