Stocks gain slightly despite weak service-sector report

Associated Press

NEW YORK

Stock indexes managed slight gains Wednesday as investors shrugged off slower growth in the U.S. service sector.

The Institute for

Supply Management reported Wednesday that business growth slowed at U.S. service providers in June. Financial companies and health-care providers reported the weakest results. On the positive side, June marked the 19th- consecutive month of growth at service companies, which employ the majority of American workers.

U.S. stocks opened mixed after a broad sell-off in Europe and another interest-rate hike in China.

Major banks fell sharply after Moody’s lowered Portugal’s credit rating to “junk” status late Tuesday. That raised fresh concerns about the strength of the European financial system and investment banks’ exposure to possible bond defaults. Bank of America Corp. lost 2.4 percent. JPMorgan Chase dropped 1.2 percent.

Some investors were surprised that stock indexes held up after the weak economic report. Dorsey Farr, a co-founder of Atlanta investment-advisory firm French Wolf & Farr, said attractive stock prices in technology and pharmaceutical companies helped the market rebound.

The Standard & Poor’s 500 index rose 1.34 to close at 1,339.22. Rupert Murdoch’s News Corp. was among the index’s biggest losers, dropping 3.6 percent, as a phone-hacking scandal engulfed one of the media giant’s tabloids. Some British legislators called on regulators to block News Corp. from taking over British Sky Broadcasting.

The Dow Jones industrial average rose 56.15 points, or 0.4 percent, to close at 12,626.02. Caterpillar Inc. rose 1.5 percent, the most of any stock in the average, followed by Intel Corp. The Nasdaq added 8.25 points, or 0.3 percent, to 2,834.02.

Among U.S. companies, General Motors gained 1 percent after analysts upgraded the stock. Walgreen Co. rose 1.5 percent after reporting strong June sales.