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Stocks Close Up After Initial Claims, Home Sales

David Moss

NEW YORK (TheStreet) -- Stocks closed higher on Wednesday, as investors gave thanks for better-than-expected new-home sales and jobless claims, and as surging metal-related stocks helped offset sluggish financial shares.

The Dow Jones Industrial Average rose 31 points, or 0.3%, to 10,464. The S&P 500 added 5 points, or 0.5%, to 1111 and the Nasdaq gained 7 points, or 0.3%, to 2176.

Materials and consumer discretionary stocks led advancers today, though the financial segment lagged a bit. The KBW Bank Index slid by 0.2%, as JPMorgan Chase(JPM) and Bank of America(BAC) shed 0.8% and 0.9%, respectively.

Kraft(KFT) shares suffered the largest decline on the Dow, down 1.5%. Caterpillar(CAT) and Boeing(BA) were helping offset those losses, adding 1.8% and 1.9%, respectively.

After the market close, American International Group(AIG) and former Chairman Hank Greenberg announced a settlement to their long-standing legal disputes. The parties, including former chief financial officer Howard Smith, agreed to release each other from all claims. AIG will also pay as much as $150 million in Greenberg and Smith's legal bills, which will ultimately be determined by an independent third party.

Stocks made modest gains following a flurry of morning economic reports. New-home sales surged 6.2% to a seasonally adjusted rate of 430,000 in October, which was better than the modest growth of 0.5% that economists expected. The median sales price of $212,200 climbed 1% from the previous month and was nearly unchanged from a year ago, according to the Commerce Department.

The data add to mounting evidence that the housing market is gradually improving. Earlier in the week, existing-home sales came in better than expected, and home prices rose for the second consecutive quarter.

Shares of homebuilders ticked higher, with the SPDR S&P Homebuilders(XHB) exchange-traded fund up by 12 cents, or 0.8%, at $14.70.

Gold, which has been soaring on dollar weakness, also got a lift from news that the Reserve Bank of India is interested in snapping up the International Monetary Fund's remaining 201.3 tons of gold. The December contract soared to new highs Wednesday, settling at $1,187 an ounce after jumping $21.20. The dollar hit a 15-month low against the euro and slumped over 1% in the afternoon, according to the Dollar Index.

Shares of gold miners surged as investors sought to capitalize on higher gold prices. The Market Vectors Gold Miners(GDX) exchange-traded fund rose by $1.41, or 2.7%, at $52.86. Shares of Barrick Gold(ABX) added 2.3%, and AngloGold Ashanti(AU) rose nearly 5%.

Stocks received a boost early Wednesday when the Labor Department said initial jobless claims fell 35,000 to 466,000, which put jobless claims at their lowest level since September 2008.

U.S. consumers appeared more resilient as the Commerce Department said personal spending rose 0.7% last month -- an encouraging sign because it had dropped 0.6% in September. That decline, however, came on the heels of 1.3% growth in August, which was attributed to the government's popular Cash for Clunkers auto program.

Also on Wednesday, the Reuters/University of Michigan Surveys of Consumers finalized November consumer sentiment level at 67.4, which was slightly lower than October's reading of 70.6 but slightly better than analysts expected.

Durable goods orders fell 0.6% in October after rising 2% in September. Although economists expected only modest growth of 0.5%, the decline in orders raised concerns about the strength of economic recovery.

Inventory data from the Energy Information Administration also helped prop up the energy sector in the afternoon. The report showed that oil stockpiles rose less than expected. Crude inventories increased by 1 million barrels last week, just short of the 1.4 million-barrel build expected by analysts polled by Platts. Gasoline stockpiles also increased by 1 million barrels, slightly more than the anticipated 500,000 barrel rise.

Late Tuesday, the American Petroleum Institute said crude oil supplies rose by 3.347 million barrels last week, reigniting concerns about weak energy demand.

The January crude oil contract settled at $77.96 a barrel after rising $1.94, and shares of integrated oil companies closed in positive territory with Chevron (CVX) and Exxon Mobil(XOM) trading about 0.8% and 0.7% higher.

Halliburton(HAL) slid 0.8% by the closing bell after the services giant warned of a 2-cent per share cut in fourth-quarter earnings due to activity reduction in Mexico.

Bond prices rose in the afternoon following results of the U.S. government's auction of $32 billion in seven-year notes. The auction had a high yield of 2.835% and a bid-to-cover of 2.76.

In earnings news,Deere(DE)reported a net loss for the fourth quarter early Wednesday.

Shares of Tiffany(TIF) rose $2.06, or 4.9%, to $43.89 after the upscale jeweler reported better-than-expected profits and raised its full-year earnings forecast.

-- Written by Sung Moss and Melinda Peer in New York.