Stocks edge higher as service industry index signals growth for first time in a year

Stocks edge up as service industry activity rises

NEW YORK — Stocks are struggling to hold their gains after a trade group reported the service industry grew in September but companies’ pricing power weakened.

The Institute for Supply Management reports Monday that its services index rose to 50.9 in September from 48.4 in August. Analysts polled by Thomson Reuters had expected a reading of 50, the dividing line between growth and contraction.

The improvement in the overall index is welcome but the prices paid index fell to 48.8 from 63.1, which signals businesses have little power to raise prices as consumers struggle.

The Dow Jones industrials are up 16 at 9,519 after being up 40 ahead of the report. The broader Standard & Poor’s 500 index is up 5 at 1,030. The Nasdaq composite index is up 6 at 2,054.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP’s earlier story is below.

NEW YORK (AP) — Stocks rose early Monday after a two-week slide in the market and as traders prepared for a report on the service industry.

Investors are looking to the report on the services industry for any sign of an economic recovery. In the past two weeks, investors have sold stocks on weaker-than-expected data.

The Institute for Supply Management’s service index reading for September is expected to improve to 50, which would be its highest level of the year, according to economists polled by Thomson Reuters. The index reached 48.4 in August. A reading below 50 indicates the industry is shrinking, while a reading above 50 indicates growth.

An improvement in the service industry is considered important to a recovery. It is dependent on consumer spending, which accounts for about 70 percent of all economic activity.

The report is due at 10 a.m. EDT.

In the first half-hour of trading, the Dow Jones industrial average rose 40.51, or 0.4 percent, to 9,528.18.

The broader Standard & Poor’s 500 index rose 4.54, or 0.4 percent, to 1,029.75, and the Nasdaq composite index rose 13.40, or 0.7 percent, to 2,061.51.

On Wednesday, investors will start to receive quarterly earnings reports that should provide further insight into any rebound. Alcoa kicks off earnings season, and investors will be looking for signs of growth to ease recent concerns about the strength of a rebound.

Companies were able to mostly beat modest profit expectations in the second quarter primarily because of cost reductions and job cuts. Now traders will be looking for signs of growth in revenue and sales to generate better profits.