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.

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

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

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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