US STOCKS-Jobs growth boosts Wall Street, extending rally

                                

                                
 * Private jobs creation turns stocks upward
                                
 * Consumer finance companies climb higher
                                
 * Dow up 0.3 pct, S&P up 0.5 pct, Nasdaq up 0.8 pct
                                
 * For up-to-the-minute market news see [STXNEWS/US]
  (Updates to close, changes byline)
                                
 By Edward Krudy
                                
 NEW YORK, Jan 5 (Reuters) - The creation of three times as
many private-sector jobs as expected turned Wall Street's early
losses into gains on Wednesday, extending a rally investors
worried had come too far too fast.
                                
 Financial stocks led gains, helped by credit-card companies
such as Capital One Finance Corp <COF.N>, which rose 4.2
percent to $45.52. The S&P consumer finance index <.GSPCFI>,
which includes major personal finance companies, gained 2.8
percent.
                                
 The jump in private payrolls to nearly triple the forecast,
comes two days ahead of the government's labor report.
Economists boosted forecasts for Friday's payroll growth.
                                
 "The economy is clearly accelerating," said Edward
Hemmelgarn, president of Shaker Investments in Cleveland. "It's
difficult to make the case for the market to go down in the
first six months of the year."
                                
 Trading volume has picked up sharply after the two-week
holiday period, showing participation in the latest stage of
the rally although many indicators are pointing to a market
that may be reaching the top of its recent trading range.
                                
 The Dow Jones industrial average <.DJI> gained 31.71
points, or 0.27 percent, to 11,722.89. The Standard & Poor's
500 Index <.SPX> rose 6.36 points, or 0.50 percent, to
1,276.56. The Nasdaq Composite Index <.IXIC> added 20.95
points, or 0.78 percent, to 2,702.20.
                                
 U.S. private employers added 297,000 jobs in December, a
report by the ADP Employer Services showed, which was nearly
three times what economists forecast and the biggest jump on
record for ADP, which has data going back to 2000.
                                
 Employment agency Monster World Wide Inc <MWW.N> rose 3.6
percent to $25.03. The stock has surged more than 73 percent
since the end of October after rising sharply ahead of the
stronger-than-expected payrolls data for that month.
                                
 The encouraging data also lifted housing stocks. The PHLX
housing index <.HGX> rose 1.8 percent, with homebuilder DR
Horton Inc <DHI.N> among top gainers, up 3.2 percent to $12.40.
Weakness in housing has been a major drag on the economy.
                                
 The S&P 500 ended 2010 up nearly 13 percent and recorded
its best December since 1991, driven in part by encouraging
economic data in the latter part of the year.
                                
 Technical indicators, such as the S&P 500 relative strength
index, which measures higher and lower closing prices over a
given period, suggest the market could be at the upper end of
its short-term trading range.
                                
 The stronger data also helped put a floor under commodity
prices that had weighed on the market earlier in the day.
Industrial shares finished higher, with Caterpillar Inc <CAT.N>
one of the best Dow performers, up 0.9 percent to $94.52.
                                
 Shares in the materials sector, however, remained weak,
including aluminum company Alcoa Inc <AA.N> edging up 0.2
percent to $16.56.
                                
 "Following yesterday's decline in commodities, investors
are treading lightly in that part of the market today, unsure
if there is a further correction in store," said Michael
Sheldon, chief market strategist at RDM Financial in Westport,
Connecticut.
                                
 In other economic data, the Institute for Supply Management
reported the vast U.S. services sector grew in December at its
fastest pace in more than four years. [ID:nN05264552]
                                
 But the employment component of the report fell, differing
with the ADP report's trend and making some investors
cautious.
                                
 The government's jobs report on Friday is expected to show
the economy created 175,000 non-farm jobs last month, according
to a Reuters poll. [ID:nN05280692]
                                
 Among stock losers, Family Dollar Stores Inc <FDO.N>
dropped 8.8 percent to $44.99 after the discount chain reported
first-quarter earnings that missed expectations.
[ID:nN04217348]
                                
 About 8.21 billion shares traded on the New York Stock
Exchange, the American Stock Exchange and Nasdaq, just below
last year's estimated daily average of 8.47 billion.
                                
 Advancing stocks outnumbered declining ones on the NYSE by
about 3 to 2, while on the Nasdaq, five stocks rose for every
two that fell.
 (Additional reporting by Caroline Valetkevitch; Editing by
Kenneth Barry)