YAHOO [ BRIEFING.COM ]: Buying tapered off into the close, but stocks still scored strong gains ahead of the monthly payrolls report on Friday. Participants were particularly fond of cyclical plays.

A better-than-expected ADP Employment Report bolstered a bullish bias in today's trade. The report suggested that private payrolls increased in June by 157,000, which is greater than the 60,000 increase that had been expected. That portends a positive reading for the official nonfarm payrolls report on Friday.

Weekly initial jobless claims received less attention. Although they continue to trend at elevated levels above 400,000, the total initial claims count for the week ended July 2 eased to 418,000 from 432,000 in the prior week. The consensus among economists polled by Briefing.com had called for an initial claims count of 425,000.

Strength was relatively broad, but buyers were fondest of financials. The sector offered leadership for virtually the entire session and scored a 1.6% gain for the day. Banks were the primary backers of the sector's bounce.

Materials stocks, energy stocks, and tech stocks complemented the financial sector's leadership. Retailers also staged strong gains. Macy's (M 30.46, +1.59) was a top performer among retailers after it reported a near 7% increase in same-store sales for June. Gap (GPS 19.28, +0.95) staged a strong gain of its own after it posted a surprise 1% increase in same-store sales.

Such strong buying has the stock market up about 7% in just two weeks and sitting at its best level since mid-May.

Defensive-oriented stocks failed to participate in the latest leg of gains. In fact, telecom was mired at the neutral line while health care actually logged a loss.

The dollar dipped, too. It had initially moved higher this morning as traders looked to extend its recent advance. However, that move failed to find traction, so the greenback ended the day with a loss of about 0.2% against competing currencies. Relative to the euro, the dollar declined 0.2% after the European Central Bank decided to raise its target lending rate by 25 basis points to 1.50%. The greenback gained 0.2% against the sterling pound, though. Weakness in the pound came after the Bank of England announced that it would leave its target rate unchanged at 0.50% and keep in place its 200 billion pound asset purchase plan.

August crude oil rallied for 2.1% to close at $98.67 per barrel. This morning's econ data helped crude oil futures rally back to above $99 for the first time in 3 weeks. This morning's inventory data did cause for futures to pull back below $99, but crude held on to most of its gains to close well higher on the session. August natural gas shed 1.9% to close at $4.14 per MMBtu. This morning's inventory data, which showed a larger-than-expected build, push natural gas futures to their lowest in close to 3 months. Prices also broke their 200 sma at $4.18.

The pullback in the dollar, following commentary from ECB President Jean-Claude Trichet's press conference, helped Sept silver close higher by 1.7% to $36.55 per ounce. August gold, which ended up 0.1% to $1530.90 per ounce, did not move higher on the pullback as it spent most of the session chopping around near unchanged.

Advancing Sectors: Financials +1.6%, Materials +1.5%, Tech +1.4%, Energy +1.4%, Consumer Discretionary +1.3%, Industrials +1.0%, Consumer Staples +0.6%, Utilities +0.4%
Unchanged: Telecom
Declining Sectors: Health Care -0.1%DJ30 +93.47 NASDAQ +38.64 NQ100 +1.4% R2K +1.5% SP400 +1.0% SP500 +14.00 NASDAQ Adv/Vol/Dec 2007/1.90 bln/608 NYSE Adv/Vol/Dec 2372/843 mln/643