Stocks continued to trade mixed in a quiet pre-Christmas session after several economic reports released Thursday were largely in line with expectations, confirming the economy continues to improve, although slowly.
The Dow Jones Industrial Average rose more than 10 points after rising modestly Wednesdayto another two-year high.
Alcoa, Hewlett-Packard and Chevron rose, while Bank of America and Travelers declined.
The S&P 500 and Nasdaq, which also closed at new highs on Wednesday, traded flat. The CBOE Volatility Index, widely considered the best gauge of fear in the market, rose slightly above 15, a multi-year low.
Among key S&P sectors financials, consumerdiscretionary and technology fell, materials, technology and energy rose.
Trading has been light all week ahead of the Christmas holiday, but the markets have continued to hold strong gains as the year nears a close. The Dow has risen about 5 percent for December and 10.9 percent for the year-to-date. The S&P 500 has risen 6.63 percent for the month, and 12.9 percent for the year-to-date. The Nasdaq rose 6.9 percent for December, and 17.7 percent for the year-to-date.
"A lot of folks are happy with their performance, and they are willing to stand pat and take this performance and wait until January rolls around," said Benny Lorenzo, chairman and CEO of Kaufman Brothers, a New York investment bank.
Lorenzo expects the Federal Reserve's plans to stimulate the economy with bond purchases, coupled with tax cuts, bode well for an economic recovery. In fact, he expects more than 100,000 jobs will have been added to nonfarm payrolls in December, a figure above consensus estimates.
Other positives for stocks include a more pro-business posture in Washington and the return of retail investors to stocks, Lorenzo said.
"The retail investor abandoned equities for bonds, and the flows of capital have just turned positive in terms of coming into equity funds in the last few months," he said.
Oil prices continued to trade above $90 a barrel, close to their highest level in two years, as inventories shrank and cold weather boosted demand. Also, pipeline supplies to Europe from Russia were partly halted after a pipeline caught fire.
The news lifted some energy stocks, including Devon Energy , Cabot Oil & Gas and Exxon Mobil .
In corporate news, General Electric said it expects its deal with Comcast will close in January, instead of the end of December, as previously expected. GE is CNBC's parent company.
Bed, Bath & Beyond earnings jumped after the home goods retailer reported forecast-beating quarterly profitlate after the bell on Wednesday.
But Micron shares fell after reporting a 24 percent drop in profits and sales that were lower than expected.
In M&A news, private-equity firm Leonard Green & Partners agreed to buy Jo-Ann Stores for about $1.6 billion or $61 a share in cash. The offer prices is a 34 percent premium to the fabrics and crafts retailer's closing price on Wednesday.
Rio Tinto is buying Riversdale, an Australian coal company, for $3.9 billion. Riversdale has coking coal assets in Africa.
And Rovi has agreed to acquire Sonic Solutions in a stock and cash deal of about $720 million. By combining companies, Rovi should better help studios sell content for digital entertainment.
Ericsson fell after Goldman Sachs cut the telecom equipment supplier to "neutral" from "buy," citing its high stock valuation, and prospects for pricing pressure in 2011.
Thursday's economic calendar was filled with data because the markets are closed Friday for Christmas. Among key reports, sales of new homes rose at a slower pace than expected, core durable goods orders were at the highest level since March, consumer sentiment was upbeat in December, and jobless claims dropped to 420,000.
Among key reports, the Commerce Department said new single-family sales rose 5.5 percent to a seasonally adjusted 290,000 unit annual rate in November, a slower pace than expected. The rate was revised downward to a 275,000 unit pace in October. Sales fell 21.2 percent from November last year,
Also, consumer confidence in December was at its highest level since June, according to the Thomson Reuters/University of Michigan survey released Thursday. The overall index on consumer sentiment was 74.5 in December, up from 71.6 in November, slightly below the median forecast of 74.7 among economists surveyed by Reuters.
And initial claims for unemploymentdropped for the second time in three weeks, falling to a seasonally adjusted 420,000 in the week ended Dec. 18, the Labor Department reported.
The four-week average, rose slightly to 426,000. The average had fallen for six straight weeks to the lowest level in more than two years.
Durable goods orders, which includes aircraft and autos, fell 1.3 percent, the Commerce Department said. But when transportation is excluded, orders rose 2.4 percent, the biggest rise for the indicator since March.
Also, personal spending rose 0.4 percent in November, a more moderate pace since the 0.7 percent increase seen in October, but a sign that consumers continue to spend, according to Commerce Department data. Personal income, meanwhile, rose 0.3 percent, thanks to rising stock portfolios.
Simmering geopolitical concerns could dampen optimism after South Korea's president said on Thursday the military should launch a "merciless counterattack" if the North tries to repeat the kind of surprise aggression on the South it launched in November.
European shares hit a 27-month high for a fourth straight session on Thursday, but the euro continued to hover near an all-time low against the Swiss Franc as concerns over the sovereign debt crisis in the region persisted.
On Tap For Next Week:
MONDAY: Texas manufacturing outlook survey, Chicago Fed Midwest manufacturing index, 2-yr Treasury note auction.
TUESDAY: S&P Case-Shiller home price index, consumer confidence, Richmond Fed business activity survey, 5-yr note auction.
WEDNESDAY: MBA mortgage applications, oil inventories, 7-yr note auction.
THURSDAY: Jobless claims, Chicago PMI, pending home sales, farm prices, money supply, Massey CEO Blankenship retires.
FRIDAY: No major economic data expected.
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