Wall Street rises as private jobs data eases rate hike worries

By Tanya Agrawal

REUTERS - Wall Street opened higher on Wednesday after data showed private sector hiring slowed sharply in July, indicating a loss of momentum in the economy at the start of the third quarter and tempering expectations of a September interest rate hike.

The ADP National Employment Report showed private employers added 185,000 workers in July, below the 215,000 increase forecast by economists surveyed by Reuters.

Weak data on private sector hiring also reduced expectations of a strong reading in the government's payrolls report due Friday.

"It suggests that September is not yet a done deal as some Fed centrists are still unimpressed by the data," Standard Chartered economist Thomas Costerg said. "It seems the Fed remains entrenched in its wait-and-see mode."

In other economic data, trade deficit widened in June as solid domestic demand in the second quarter and a strong dollar sucked in imports of food and automobiles.

Some economists have said a bunch of soft economic data - released in the last few days - could prompt the U.S. Federal Reserve to wait until December to increase interest rates for the first time in nearly a decade.

The Fed has said it needs to see a sustained recovery before it raises rates for the first time in nearly a decade.

Stock market investors are keeping a close eye on economic data and the Fed's statements as a rate hike would increase cost of borrowing for companies, leading to lower profits.

Fed Governor Jerome Powell told CNBC on Wednesday that the central bank's policymakers had not yet decided whether to raise rates in September, adding that data on the labor market would be key to that decision.

At 9:38 a.m. ET (1338 GMT) the Dow Jones industrial average was up 59.57 points, or 0.34 percent, at 17,610.26, the S&P 500 was up 14.05 points, or 0.67 percent, at 2,107.37 and the Nasdaq Composite was up 41.97 points, or 0.82 percent, at 5,147.51.

Nine of the 10 major S&P sectors were higher, with the infotech index's 1.42 percent rise leading the advancers. The consumer discretionary index was the lone laggard as Walt Disney weighed.

U.S. stocks finished lower on Tuesday for a third straight session as investors worried about a rise in interest rates and Apple's shares hit their lowest in over six months.

The iPhone maker's shares bounced back on Wednesday, rising 1 percent to $115.88.

Investors will also assess earnings reports from a number of companies on Wednesday including Tesla Motors, GoDaddy, Fitbit and CBS.

Dow component Walt Disney's shares fell 8.9 percent to $110.87 after the media company lowered profit guidance for its cable networks unit and reported quarterly revenue slightly below expectations.

Etsy slumped 21.2 percent to $15.15 a day after the crafts shopping website operator's quarterly loss doubled due to higher marketing expenses.

Handbag maker Kate Spade rose 11 percent to $23.13 after same-store sales beat estimates.

Cognizant Technology jumped 8.8 percent to $68.92 as the IT provider's results best expectations.

Advancing issues outnumbered decliners on the NYSE by 2,125 to 537. On the Nasdaq, 1,745 issues rose and 507 fell.

The S&P 500 index showed 41 new 52-week highs and five new lows, while the Nasdaq recorded 65 new highs and 33 new lows.

(Reporting by Tanya Agrawal; Editing by Saumyadeb Chakrabarty)