Stocks ended a holiday-shortened session on Thursday at new highs for the year following upbeat reports on unemployment and durable goods orders. A weaker dollar also helped buoy the market, lifting energy and materials stocks. Christmas Eve trading volume was extremely light. After Thursday’s results, the S&P 500 has risen five straight days, the longest winning streak in almost two months.
The encouraging signs of the labor market and consumer demand helped assuage investors who were disappointed the day before by an unexpected plunge in new home sales last month. New claims for unemployment benefits fell 28,000 to 452,000 last week, the Labor Department reported, the latest sign of improvement in the job market. It was the best figure since September 2008, just before the credit crisis peaked, and better than the 470,000 new claims economists had predicted. Separately, the Commerce Department said orders to factories for durable goods, excluding the volatile transportation sector, increased 2% last month, double what analysts had expected.
The Dow Jones industrial average rose 53.66, or 0.5%, to 10,520. The Standard & Poor’s 500 index rose 5.89, or 0.5%, to 1,126, while the Nasdaq composite index rose 16.05, or 0.7%, to 2,286. Rising shares outnumbered decliners by about 3 to 1 on the New York Stock Exchange, where volume came to 319.3 million shares, compared with 384.8 million on Wednesday.
In industry news, health care stocks were little changed after landmark health care reform legislation was cleared by the Senate. Some analysts believe that the sector could have fared much worse in the bill. Observers noted that many big health insurers are still trading near their highs for the year.
Technology stocks continued to lead gainers. Shares of Apple Inc. (AAPL) rose to a record trading high of $209.35 amid rumors the consumer electronics giant could release a new tablet computer in January.
The ICE Futures U.S. dollar index, which measures the dollar against other currencies, fell 0.1%. Gold prices climbed back above $1,100 an ounce, while oil prices rose $0.96 cents to $77.63 a barrel on the New York Mercantile Exchange. Bond prices fell, sending their yields higher. The yield on the benchmark 10-year Treasury note rose to 3.80% from 3.75% late Wednesday. The Treasury yield curve, a barometer for the health of the economy widened to a record last week as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt.
Economic growth in the US is accelerating more than previously anticipated as business investment picks up, according to economists at Morgan Stanley. The economy is poised to grow at a 5.1% annual rate from October to December according to a revised forecast by Morgan Stanley following the Commerce Department’s report on durable goods last week.
