Strong reports lift Dow to new high

Encouraging reports on hiring and growth in the service sector sent small companies and banks higher Wednesday and knocked bond prices into a tailspin. The yield on the benchmark 10-year Treasury note surged to its highest level in more than seven years.

Both reports were stronger than analysts expected and suggest the economy is in good shape despite rising interest rates and oil prices, and the trade dispute between the U.S. and China.

“This is evidence of strong economic growth and the likelihood earnings will continue to be good,” said David Joy, chief market strategist at Ameriprise. Although some experts think the economy will slow somewhat in the third and fourth quarters, Joy’s view is that “we’re not going to get much of a slowdown.”

The S&P 500 index added 2.08 points, or 0.1%, to 2,925.51. The Dow Jones industrial average gained 54.45 points, or 0.2%, to 26,828.39, another all-time high. It was up as much as 177 points earlier. The Nasdaq composite picked up 25.54 points, or 0.3%, to 8,025.09. The Russell 2000 index of small-company stocks climbed 15.25 points, or 0.9%, to 1,671.29.

The survey on private company hiring by ADP raised expectations for the government’s broader jobs report due out Friday, which tends to have an even bigger effect on markets. The trade group Institute for Supply Management said its index measuring the service sector reached the highest level in a decade.

Apple rose 1.2% to $232.07 and Caterpillar rose 2.2% to $158.22.

The yield on the 10-year Treasury note rose to 3.18%, its highest since July 2011 and up from 3.05% a day earlier.

Procter & Gamble fell 1.6% to $83.03 and Walmart lost 1.1% to $94.07. Investors often treat those stocks as alternatives to bonds, and they tend to fall when bond yields rise.

Stocks in Europe rose after Italy’s economy minister backed down on spending plans that would keep the country’s deficit at an elevated level for three years.

The CAC 40 in France rose 0.4% while the FTSE 100 in Britain rose 0.5%. German markets were closed for a holiday.

Benchmark U.S. crude jumped 1.6% to $76.41 a barrel in New York. Brent crude, used to price international oils, rose 1.8% at $86.29 a barrel in London.

Wholesale gasoline edged up 0.5% to $2.14 a gallon. Heating oil rose 1.2% to $2.44 a gallon. Natural gas climbed 2% to $3.23 per 1,000 cubic feet.

Gold fell 0.3% to $1,202.90 an ounce. Silver lost 0.2% to $14.67 an ounce. Copper rose 1% to $2.83 a pound.

The dollar rose to 114.34 yen from 113.69 yen. The euro fell to $1.1517 from $1.1545.