Stocks closed higher on Thursday, virtually eradicating Wednesday’s decline, amid some upbeat signals on Europe’s debt crisis and the U.S. economy.
The Dow Jones industrial average closed at 12,293.02, up 141.61 points or 1.2 per cent. The broader S&P 500 closed at 1,263.02, up 13.38 points or 1.1 per cent. In Canada, the S&P/TSX composite index closed at 11,841.70, up 113.29 points or 1 per cent.
The gains were broad, lifting all 10 subindexes within the S&P 500 and all 30 stocks within the Dow – and some of Wednesday’s biggest laggards flipped around to become the biggest winners: Financials, industrials, energy stocks and materials led the day’s gains.
Much of the enthusiasm for stocks seems to be coming from some better-than-expected news from Italy and the United States. An auction of Italian 10-year government bonds showed tepid demand on Thursday morning. However, yields fell, pointing to lower-than-expected borrowing costs. The moves sent European stocks higher, with Germany’s DAX index closing up 1.3 per cent.
At the same time, U.S. pending home sales rose 7.3 per cent in November, adding to a recent round of better-than-expected housing numbers that could be pointing to a recovery in the market after a five-year bear market. Home builder PulteGroup Inc. surged 6.1 per cent.
Initial jobless claims took a step back, rising by 15,000 for the period ended last week – but the decline in the four-week moving average continued to point to modest improvements in the labour market.
U.S. financials were the biggest winners, as far as subindexes go: Bank of America Corp. rose 3.2 per cent and JPMorgan Chase & Co. rose 2.2 per cent. In other moves, Hewlett-Packard Co. rose 1.7 per cent and Chevron Corp. rose 1.4 per cent.
In Canada, gold remained a key area of the market to watch. The price of gold slumped to $1,540.90 (U.S.) an ounce, down $23.20. However, gold stocks moved in the opposite direction, with Barrick Gold Corp. rising 1.8 per cent.