Stocks climbed on Thursday, with the S&P 500 advancing to a five-year intraday high on signs of strength in the housing and job markets and on better-than-expected results from online marketplace eBay.
Reuters reported that the number of Americans filing new claims for unemployment benefits fell to a five-year low last week and housing starts jumped last month to the highest since June 2008.
Strength in the housing and labor markets is key to sustained growth and higher corporate profits.
Job market improvement helps stimulate consumer spending while a recovery in housing means more purchases of appliances, furniture and other household goods as well as a source of employment.
The S&P is on track for its third consecutive advance, which pushed the index above an intraday peak set in September to its highest since December 2007. The PHLX semiconductor index up by 1.7 per cent, reached its highest level in eight months.
“Having consolidated really for the last two weeks, the fact that we broke out, I think that that’s sucking in quite a bit of money,” the portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania, Mr. James Dailey, said.
In the housing sector, PulteGroup Incorporated shares gained 4.9 per cent to $20.29 and Toll Brothers Incorporated advanced by 3.1 per cent to $35.99. The PHLX housing sector index climbed by 2.2 per cent.
The Dow Jones industrial average gained 110.01 points, or 0.81 per cent, at 13,621.24. The Standard & Poor’s 500 Index was up by 10.96 points, or 0.74 per cent, at 1,483.59. The Nasdaq Composite Index gained 22.52 points, or 0.72 per cent, at 3,140.07.
EBay’s shares rose by 2.7 per cent to $54.33 a day after it reported holiday quarter results that just beat Wall Street expectations. It gave a 2013 forecast that was within analysts’ estimates.
Gains were tempered somewhat by weakness in the financial sector, with Bank of America down by 4.3 per cent to $11.27 and Citigroup off by three per cent to $41.22 after they posted their results.
Bank of America’s fourth-quarter profit fell as it took more charges to clean up mortgage-related problems. Citigroup posted $2.32bn of charges for layoffs and lawsuits.
The S&P financial sector index slipped by 0.14 per cent as the only one of the 10 major S&P sectors to decline.
S&P 500 earnings are expected to have risen by 2.3 per cent in the fourth quarter, Thomson Reuters data showed. Expectations for the quarter have fallen considerably since October when a 9.9 per cent gain was estimated.