NEW YORK, Feb 6 — US stocks rallied for a third straight day yesterday on encouraging US economic data and waning fears of the financial fallout from a virus out of China but losses in Tesla shares pulled the Nasdaq off its record high.

The ADP National Employment Report showed private payrolls jumped by 291,000 jobs in January, the most since May 2015, while a separate report showed US services sector activity picked up in January, suggesting the economy could continue to grow moderately this year even as consumer spending is slowing.

The benchmark S&P 500 has more than recovered from last week’s steep losses after China boosted liquidity to limit the economic impact of the coronavirus outbreak.

"There is at least not as much of a fear of an outcome of a pandemic that will have as much economic pressure globally as maybe initially was thought,” said Delores Rubin, senior equities trader at Deutsche Bank Wealth Management in New York.

The Dow Jones Industrial Average rose 417.1 points, or 1.45 per cent, to 29,224.73, the S&P 500 gained 31.88 points, or 0.97 per cent, to 3,329.47 and the Nasdaq Composite added 25.73 points, or 0.27 per cent, to 9,493.71.

Energy was the best performing S&P 500 sector, jumping 3.6 per cent along with a rise in crude prices.

The healthcare sector climbed 2.1 per cent, led by health insurers as well as by a 21.6 per cent jump in shares of Biogen after the biotech company won a patent ruling on a multiple sclerosis drug.

Shares of Tesla cooled off after a huge six-day rally, dropping 18.6 per cent.

Fourth-quarter reporting season for large US companies is more than halfway done, with S&P 500 companies seen posting a 1.6 per cent rise in earnings for the period, according to IBES data form Refinitiv.

"We have had some mixed results, but the big names have been surprising to the upside,” Rubin said. "As that continues, folks are not finding that many reasons not to be in the market.”

In earnings news, Ford Motor Co shares fell 9.4 per cent after the company delivered a weaker-than-expected 2020 forecast.

Coty Inc shares rose 12.7 per cent after the cosmetics and fragrance maker reported quarterly profit above expectations.

Merck shares dropped 3.1 per cent after the drugmaker said it will spin off its women’s health, biosimilar drugs and older products into a separate publicly traded company.

Advancing issues outnumbered declining ones on the NYSE by a 2.88-to-1 ratio; on Nasdaq, a 2.37-to-1 ratio favoured advancers.

The S&P 500 posted 70 new 52-week highs and no new lows; the Nasdaq Composite recorded 119 new highs and 20 new lows. — Reuters