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North American stock markets closed firmly in positive territory, with the S&P 500 ending at a fresh five-year high and the S&P/TSX index at its highest level in about 10 months.

Reports today showed an improvement in the U.S. labour market at a time when housing starts are rising to four-year highs, helping to distract traders from concerns over how the U.S. will resolve its debt and spending problems. Economically sensitive areas did particularly well, with the Dow Jones transportation average hitting a record high and many consumer stocks rallying.

The benchmark Canadian index closed up 65 points, or 0.5 per cent, at 12,674; the Dow Jones industrial average was down 85 points, or 0.6 per cent, at 13,596; and the S&P 500 up 8 points, or 0.5 per cent, at 1,481.

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Intel seemed unable to wait until market close to reveal its fourth quarter. Just minutes prior to 4 p.m. (ET), the tech giant reported earnings per share of 48 cents, 2 cents better than the Street consensus. But it forecast first-quarter revenues slightly below expectations. Shares rallied into the close to end up 2.5 per cent at $22.68, but fell 3.1 per cent in the post market.

The U.S. Commerce Department reported this morning that housing starts jumped to a 954,000 annual rate in December, up from 890,000 the previous month. Homebuilders, not surprisingly, did particularly well after the news, with PulteGroup Inc. closing up 5.3 per cent at $20.38, a multiyear high.

U.S. new jobless claims for last week beat economists' expectations as they fell to 335,000 from 371,000 the week prior. The Street was looking for a number closer to 368,000.

The economic news wasn't all good. The U.S. Philadelphia Fed Survey's general business conditions index unexpectedly fell to negative 5.8 per cent this month. Economists were looking for a positive 6.0.

At the TSX, consumer discretionary stocks was the top performing subgroup, gaining 1.4 per cent. Energy stocks rose 0.9 per cent, as the February oil contract in New York closed up 1.3 per cent at $95.49 (U.S.) a barrel. It earlier topped $96, its highest level since mid-September, on supply concerns arising from the takeover of a natural gas plant in Algeria by Islamist militants and the subsequent deaths of some hostages.

Construction firm Aecon Group closed up 7.3 per cent at $11.75 after TD Securities raised its price target to $16. Boeing managed to close up 1.2 per cent. While the U.S. FAA grounded its 787s late Wednesday, Boeing also received some good news, as it overtook Airbus SAS for the first time in a decade as the world's largest maker of passenger jets last year.

U.S. financials didn't join the party, with Bank of America closing down 4.2 per cent at $11.28 and Citigroup down 2.9 per cent at $41.24. Both reported earnings reports this morning that were muddled with charges.

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China will be in focus overnight; it's releasing fourth-quarter GDP data, and expectations are for a 7.8 per cent year-over-year rise, up from 7.4 per cent the prior quarter.

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About the Author
Investment Editor

Darcy Keith is The Globe and Mail's Investment Editor. He has been a business journalist since 1992 and joined the Report on Business in 2010 from Yahoo! Canada, where he was the senior editor of finance. More


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