STRONGER-than-expected data on US housing starts and jobless claims lit a fire under stocks yesterday, pushing the S&P 500 to a five-year high and its third day of gains.
Shares of chipmaker Intel rose in extended-hours trading after the company forecast better-than-expected first-quarter gross margins. Intel gained 1.85 per cent after closing up 2.6 per cent at $22.68. Semiconductor shares rose two per cent to the highest close in eight months.
A pair of economic reports lifted investors’ sentiment. The number of Americans filing new claims for unemployment benefits fell to a five-year low last week and housing starts jumped last month to the highest since June 2008.
Strength in the housing and labour markets is key to sustained growth and higher corporate profits, helping to bring out buyers even on a day when earnings reports were mixed.
Gains were tempered by weakness in the financial sector, with Bank of America down 4.2 per cent to $11.28 and Citigroup off 2.9 per cent to $41.24 after their results.
The S&P 500 ended at its highest since December 2007 and now sits just 5.6 per cent from its all-time closing high of 1,565.15.
“Having consolidated really for the last two weeks, the fact that we broke out, I think that that is sucking in quite a bit of money,” said James Dailey, of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
The Dow Jones industrial average was up 84.79 points, or 0.63 per cent, at 13,596.02. The Standard & Poor’s 500 Index was up 8.31 points, or 0.56 per cent, at 1,480.94. The Nasdaq Composite Index was up 18.46 points, or 0.59 per cent, at 3,136.00.
Better-than-expected earnings and revenue reported by online marketplace eBay late Wednesday helped the stock gain 2.7 per cent to $54.33.
In the housing sector, PulteGroup shares gained 4.9 per cent to $20.29 and Toll Brothers advanced 3.1 per cent to $35.99.
The PHLX housing sector index climbed 2.4 per cent, reaching its highest close since August 2007.
Financials were the only S&P 500 sector to register a slight decline for the day.
Bank of America’s fourth-quarter profit fell as it took more charges to clean up mortgage-related problems. Citigroup posted $2.32bn of charges for layoffs and lawsuits.
Energy shares led gains on the Dow as US crude oil prices jumped more than one per cent. Shares of Exxon Mobil were up 0.8 per cent at $90.20 while shares of Chevron were up 0.7 per cent at $114.75.
S&P 500 earnings are expected to have risen 2.3 per cent in the fourth quarter, Thomson Reuters data showed. Expectations for the quarter have fallen considerably since October when a 9.9 per cent gain was estimated.