NEW YORK—U.S. stocks closed higher on Thursday as new claims for unemployment benefits remained low and sales of existing homes picked up across the nation.
The Dow Jones Industrial Average gained 135 points, or 1.1 percent, on Thursday. The S&P 500 Index increased by 13 points, or 1.1 percent, while the Nasdaq Composite Index climbed 24 points, or 0.9 percent.
Initial claims for jobless benefits rose slightly last week after three consecutive weeks of declines, according to figures released by the Labor Department yesterday. Weekly applications rose 15,000, to a seasonally adjusted 381,000, which remains below the 400,000 threshold economists typically use to determine whether the economy is growing. Figures under 400,000 are considered to be positive, while figures under 375,000 typically reduce the unemployment rate. The less volatile 4-week moving average declined to 375,000, the lowest level in 3 years.
As of last month, the U.S. unemployment rate sat at 8.6 percent. While planned layoffs declined, most companies are slow to hire due to difficulties in forecasting future growth.
However, in a survey of hiring managers conducted by job search website CareerBuilder this week, small businesses are more optimistic than their larger counterparts in hiring staff.
A separate report from the National Association of Realtors (NAR) indicated that existing home sales gained more than forecast in November. Pending home sales increased by 7.3 percent last month, boosted by lower home prices and low interest rates.
“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines, but contract failures have been running unusually high,” said NAR economist Lawrence Yun in a statement. “Some of the increase in pending sales appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage.”
The reports are consistent with recent trends of declining home inventories and prices in most markets. The latest S&P/Case-Shiller Index of property values this week showed that home values dropped more than 3 percent from October to November, making homes more affordable to buyers.
The news sent shares of home building companies higher on Thursday, signaling that less inventory could trigger more new construction. Shares of KB Home (NYSE: KBH) climbed 6 percent, while shares of Lennar Corp. (NYSE: LEN) gained 4.6 percent. Shares of D.R. Horton Inc. (NYSE: DHI) also gained 4.4 percent Thursday.
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