Wall Street choppy as data strengthens rate hike odds

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The S&P 500 and the Dow Jones Industrial Average swung between losses and gains on Wednesday after a strong private hiring report raised the odds of an interest rate hike next week, lifting bank stocks while dragging rate-sensitive sectors. The ADP National Employment report showed the U.S. private sector added 298,000 jobs last month, far bigger than 190,000 that economists on average had estimated. The data acts a precursor to Friday's nonfarm payrolls report, which includes private and public sector jobs and acts as a barometer of the U.S. economy. The S&P 500 financial index . SPSY was up 0.63 percent, led by big banks such as Citigroup (C. N), Bank of America (BAC. N) and Wells Fargo (WFC. N). However, the impact was offset by a 1 percent decline in high-dividend paying utilities . SPLRCU and real estate . SPLRCR sectors. The dollar gathered strength, while gold - which tends to lose value in a rising rates environment - was lower.

"Equities are at the crossroads of optimism and concern and are likely to go sideways until we get greater clarity from the Fed and legislative action," said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis. Investors are also digesting a strong post-election rally that has driven the main indexes to record highs, sparking some concern over market valuations. "I think to a degree, equities are priced to perfection and there are several indicators that point to caution," Sandven said. The S&P 500 is trading at about 18 times forward earnings estimates against the long-term average of about 15 times, according to Thomson Reuters data.

At 10:58 a.m. ET (1558 GMT), the Dow . DJI was down 6.88 points, or 0.03 percent, at 20,917.88 and the S&P 500 . SPX was up 2.5 points, or 0.11 percent, at 2,370.89. The Nasdaq Composite . IXIC was up 22.15 points, or 0.38 percent, at 5,856.08, boosted by gains in Microsoft (MSFT. O) and Alphabet (GOOG. O). Caterpillar (CAT. N) kept the Dow in the red, declining 1.2 percent after the New York Times said it reviewed a report commissioned by the U.S. government that accused the heavy equipment maker of carrying out tax and accounting fraud.

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