Stocks Rise As Unemployment Claims Remain Modest
NEW YORK (AP) — Stocks rose Thursday after the government reported that the number of claims for unemployment benefits remained at a level consistent with modest job growth. Contracts to buy homes rose to the highest level in a year and a half.
The four-week average of unemployment claims fell to a three-and-a-half-year low of 375,000, an indication that hiring could pick up.
The National Association of Realtors says its index of sales agreements jumped 7.3 percent last month. Quincy Krosby, Prudential Financial's market strategist, said the report was an encouraging signal for the overall economy going in to 2012.
"The correlation between jobs and housing has been crystal-clear this year," Krosby said. "Parts of the country where jobs are more plentiful are the ones where the housing market has held up."
The positive housing news sent the stocks of home builders sharply higher. Masco Corp. soared over 5 percent, and was the largest gainer in the S&P 500. PulteGroup Inc. and Lennar Corp. both rose above 4 percent.
The Dow Jones industrial average rose 98 points at 12,250 as of noon. The S&P 500 rose 9 points to 1,259, and is at breakeven for the year. The Nasdaq composite index rose 17 at 2,607.
Trading was thin on the holiday-shortened week. Friday is the last trading day of 2011.
Europe's debt woes pushed the euro lower. The euro fell to its lowest level against the dollar in more than a year and its lowest level against the Japanese yen in a decade. At one point the euro's value against the dollar went as low as $1.28, the lowest since September 2010.
Investors continued to be worried that Italy's 10-year borrowing rate remains uncomfortably close to the 7 percent level that economists consider unsustainable. Greece, Ireland and Portugal all had to seek financial bailouts after their 10-year bond yields rose above 7 percent.
Italy paid 6.98 percent on a 10-year bond auction where it raised $3.3 billion. That's lower than the 7.56 percent it had to pay at an equivalent auction last month, but not low enough to assuage investors. Italy's new premier said his government has more to do before it convinces financial markets it can manage the heavy debts that have made it the focus of the euro zone crisis.
In other corporate news:
— Mosaic Co. stock slid 1 percent after the fertilizer company said it would cut production of phosphate because of low demand.
— Amazon.com Inc.'s stock slid a little less than 1 percent after a Goldman Sachs analyst said the online retailer could miss Wall Street sales expectations.
— Sears Holdings Corp. fell 2 percent as investors worried over whether the retailer can survive, two days after it said it was closing over 100 stores nationwide.