Wall Street Posts Comeback Rally as Traders Cheer Data

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The blue chips zoomed higher on Thursday, reversing the previous session's slide, as traders cheered a round of encouraging data on the U.S. economy.

Today's Markets

The Dow Jones Industrial Average rose 136 points, or 1.1%, to 12,287, the S&P 500 gained 13.4 points, or 1.1%, to 1,263 and the Nasdaq Composite climbed 23.8 points, or 0.92%, to 2,614.

Bank of America (BAC) and JPMorgan Chase (JPM), the biggest banks in the U.S. by assets, led the blue chips higher. Other large banks such as Citigroup (C) and Wells Fargo (WFC) performed solidly too. 

Industrials, such as Caterpillar (CAT), had a strong showing, while consumer staples lagged behind.

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Thursday's rally comes on the heels of a moderately strong selloff in the prior session, in which the S&P 500 fell into negative territory for the year. However, the stock-market index rebounded on Thursday, and is now up 0.43% for the year. 

Volume has been quite thin all week. Indeed, only 2.25 billion shares changed hands on the New York Stock Exchange -- roughly half of the average for the year. 

Housing Data Top Expectations

The number of Americans signing contracts to buy existing single-family homes rose 7.3% in November from October to the highest level in more than a year and a half, according to the National Association of Realtors. The housing market improved in every region of the country, the report said. From last year, pending sales are up 5.9%.

"Lower mortgage rates may be translating into stronger demand for housing," Michael Gapen, an economist at Barclays Capital, wrote in a note to clients. "The strong rebound may also hint at coming strength in existing home sales."

Pending home sales are seen as a forward-looking indicator, meaning these data may be a sign of some reprieve in the beleaguered sector.

Weekly jobless claims rose to 381,000 last week from a revised 366,000 the week prior. Economists forecast a smaller rise to 375,000. The four-week-moving average, however, fell to 375,000 from 380,750. That measure helps smooth out week-to-week volatility and indicates the trend is pointing to continued improvement in the labor market.

Europe's sovereign debt crisis has still been a major concern among market participants. Italy held a successful short-term debt auction on Wednesday, in which demand was high and borrowing costs halved on certain issues. However, a longer-term offering on Thursday was not nearly as well received. 

The embattled country sold roughly $9 billion in long-term bonds, short of its target of $10.9 billion. It sold 10-year paper at an average yield of 6.98%, down considerably from the euro-era high of 7.56% it had to pay at its last auction in November, but still at a level that is seen by many analysts to be unsustainable. 

The benchmark 10-year yield in the secondary market ticked slightly lower to 7.13% from 7.17% before the auction, according to Reuters. However, the European Central Bank stepped in to buy small amounts of Italian debt shortly after the offering, generally seen as a bid to keep yields down, according to a report by Reuters, citing unidentified traders. 

The euro fell to the lowest level since September 2010 on the news before rebounding on Thursday afternoon. The greenback fell 0.02% against a basket of six world currencies. European stock markets climbed higher in afternoon trade.

In metals, gold sunk $23.20, or 1.5%, to $1,540.90 a troy ounce. Futures are off for the sixth-straight session, and are down 11.8% for the month. 

Energy prices rose slightly after selling off in the prior session. The benchmark crude oil contract traded in New York gained 29 cents, or 0.29%, to $99.65 a barrel. Wholesale RBOB gasoline jumped 1.1% to $2.68 a gallon. 

Investors bought U.S. debt on the day, pushing yields slightly lower. The benchmark 10-year Treasury fell 0.016 percentage points to 1.897% -- the third-straight day of losses.

Foreign Markets

European blue chips rose 1.7%, the English FTSE 100 climbed 1.1% to 5,567 and the German DAX gained 1.3% to 5,849. 

In Asia, the Japanese Nikkei 225 fell 0.29% to 8,399 and the Chinese Hang Seng dipped 0.65% to 18,398.

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