Stocks surge on good news
NEW YORK -- Stocks ended Wednesday on a positive note after a batch of economic reports offered hope that the economy was improving.
Incomes rose last month and consumer spending climbed for a fifth month. That raised hopes that shoppers will hit the malls in droves the day after Thanksgiving, the start of the holiday shopping season.
At the same time, fewer people claimed unemployment benefits last week, a sign that the labor market is recovering.
"There are fundamental signs that the economy is turning a corner," said John O'Donoghue, co-head of equities at Cowen & Co.
The Dow Jones industrial average soared 150.91, or 1.4 percent, to 11,187.28.
The Standard & Poor's 500 index gained 17.62, or 1.5 percent, to 1,198.35. The Nasdaq composite index rose 48.17, or 1.9 percent, to 2,543.12.
The upturn marked an abrupt reversal from Tuesday, when an exchange of artillery fire between North and South Korea led nervous investors to sell stocks and dash into gold, Treasurys and other assets often used as hiding spots. Investors also shrugged off a steep fall in new home sales and manufacturing orders.
Tim Speiss, chair of the wealth advisory group at EisnerAmper, said investors were right to focus on the improved signs in employment and consumer spending, which are far more important to an economic resurgence than home sales or manufacturing orders.
"If we don't have strong consumer spending in this economy, we're in trouble," Speiss said. "When there's spending, manufacturing will increase to meet that demand."
The government said first-time claims for unemployment benefits fell 34,000 to 407,000 last week. That was much better than the 435,000 new claims economists had expected.
A separate report showed that Americans' incomes rose 0.5 percent last month, slightly better than expected. Their spending rose 0.4 percent, up slightly from September.
Safety assets moved lower as investors became more willing to take on risk. Treasury prices edged lower, pushing their yields higher. The yield on the 10-year note rose to 2.92 percent from 2.77 percent Tuesday. Gold fell to $1,375 an ounce, down from $1,379.
Investors largely dismissed downbeat reports that showed declines in sales of manufactured goods and new home sales. Orders for durable goods fell 3.3 percent, while new home sales and median home prices both fell last month. Sales of single-family houses slid 8.1 percent, the fourth time the rate has dropped in the past six months.
U.S. stock and bond markets will be closed today. They will reopen for half-day sessions Friday.