Stocks were higher in another thin session Thursday as better-than-expected pending home sales lifted sentiment, but gains were limited after a slight increase in weekly unemployment benefits and mixed results from the Italian bond auction. The Dow Jones Industrial Average climbed, led by JPMorgan and BofA, after a selloff in the previous session. The S&P 500 and the Nasdaq also rose.
The CBOE Volatility Index, widely considered the best gauge of fear in the market, was above 23.
Most S&P sectors were trading higher, led by financials and industrials.
With only two full trading sessions left in the year, trading volume is expected to remain light throughout the shortened holiday week as most investors are unlikely to make large bets until after the New Year. Major averages have also been struggling to finish the year in positive territory. Of the three major averages, the Dow is the only index in the black for the year while the S&P is straddling the flatline.
Paul Hickey from Bespoke noted that the second to last day of the year finishes higher 68 percent of the time, while the last day is positive only 32 percent of the time.
The yield on Italian 10-year bonds fell from the euro era highs reached in November, settling slightly below the market-sensitive level of 7 percent in an auction on Thursday.
Investors were looking to the auction of longer term Italian bonds to see whether appetite for the country's debt had returned, after yields halved in the sale of six-month T-bills on Wednesday.
Meanwhile, the euro pared its early losses against the dollar to rise back above $1.29, but ongoing concerns about the euro zone crisis kept the currency close to a 15-month low. Gold slumped to its lowest level in almost six months to near $1,530 an ounce.
On the economic front, weekly jobless claims rose 15,000 to a seasonally adjusted 381,000, according to the Labor Department, but remained under the key 400,000 level for the fourth straight time. Economists polled by Reuters had forecast claims rising to 375,000.
“All the data we’ve seen today has been neither good nor bad including the Italian auction—it wasn’t horrible, it was not great,” said Jim Iuorio, director of TJM Institutional Services. “The jobless claims were a little worse than expected, but much better than they were a couple months ago. So we never get any clarity in anything, it’s a slow moving trend towards better.”
Also, pending home sales soared to a 19-month high in November to 100.1, a 7.3 percent increase, according to the National Association of Realtors. Economists surveyed by Reuters had expected sales to gain 2 percent.
And business activity in the Midwest hit 62.5 in December, according to Institute for Supply Management-Chicago. Economists polled by Reuters had forecast a December figure of 61.0.
China's e-commerce company Alibaba Group hired a lobbying firm in Washington, in what Reuters said could be a sign that the company would be willing to bid for Yahoo if talks to unwind their Asia partnership fail.
Mosaic slipped after the fertilizer producer said it will slash its phosphate production because prices have fallen to unsustainable levels.