Stronger-than-expected data on U.S. housing starts and jobless claims lit a fire under stocks on Thursday, pushing the Standard & Poor's 500 index to a five-year high and its third day of gains.
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 labor 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 percent to $11.28 and Citigroup off 2.9 percent to $41.24 after their results.
The S&P 500 gained 8.31 points, or 0.56 percent, to close at 1,480.94.The index ended at its highest since December 2007 and now sits just 5.6 percent from its all-time closing high of 1,565.15.
The Dow Jones Industrial Average was up 84.79 points, or 0.63 percent, at 13,596.02. The Nasdaq Composite Index was up 18.46 points, or 0.59 percent, at 3,136.00.
"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, portfolio manager of TEAM Asset Strategy Fund in Harrisburg, Pennsylvania.
Better-than-expected earnings and revenue reported by online marketplace eBay late Wednesday helped the stock gain 2.7 percent to $54.33.
In the housing sector, PulteGroup Inc shares gained 4.9 percent to $20.29 and Toll Brothers Inc advanced 3.1 percent to $35.99. The PHLX housing sector index climbed 2.4 percent, 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 $2.32 billion of charges for layoffs and lawsuits.
Energy shares led gains on the Dow as U.S. crude oil prices jumped more than 1 percent. Shares of Exxon Mobil were up 0.8 percent at $90.20 while shares of Chevron were up 0.7 percent at $114.75.
S&P 500 earnings are expected to have risen 2.3 percent in the fourth quarter, Thomson Reuters data showed. Expectations for the quarter have fallen considerably since October when a 9.9 percent gain was estimated.
Volume was roughly 6.5 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the 2012 average daily closing volume of about 6.45 billion.
Advancers outpaced decliners on the NYSE by about 22 to 7 and on the Nasdaq by about 2 to 1.
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