NEW YORK (AP) -- The stock market continued its upward climb Thursday as traders went back to work after the Christmas holiday, adding to what has already been a historic year for the market.
Traders were encouraged by an unexpectedly large drop in claims for unemployment benefits last week, the latest sign that the U.S. job market is improving. Trading volume was very low, however, as most portfolio managers have closed out their positions for the year
The yield on the 10-year Treasury note, a benchmark for many kinds of loans, briefly crossed above the psychologically important 3 percent mark. It hasn’t been that high since September.
The Dow Jones industrial average rose 122.33 points, or 0.8 percent, to 16,479.88. It was the 50th record high close for the Dow this year. The index is up 25.8 percent so far in 2013, on pace to have its best year since 1996.
The Standard & Poor’s 500 index rose 8.70 points, or 0.5 percent, to 1,842.02 and the Nasdaq composite was up 11.76 points, or 0.3 percent, to 4,167.18. With Thursday’s gains, the S&P 500 is up 29.2 percent for the year, or 31.3 percent when dividends are included. The S&P is on track for its best year since 1997.
Bond prices fell, pushing the yield on the 10-year Treasury note to 2.99 percent from 2.98 percent Tuesday. The note briefly traded above 3 percent.
Yields have been climbing since late November as economic reports have suggested that the U.S.
"There’s a silver lining to see bond yields rise like this, because it’s a sign that the economy is getting stronger," said John De Clue, chief investment officer of U.S. Bank Wealth Management.
Yields on Treasury securities like the 10-year note are used to calculate interest rates on student loans, mortgage rates, credit cards, and many other kinds of debt. As the 10-year yield has risen in the last six months, so have mortgage rates. In early May, the average mortgage rate was around 3.35 percent. This week it was 4.48 percent, according the government mortgage agency Freddie Mac.
"We are starting to take the medication away from the bond market, but it’s important to note that yields are still at historically low levels," said Dan Veru, chief investment officer of Palisade Capital Management, which manages $4.5 billion in assets.
Investors cheered the latest signal that the U.S. economy is improving. The Labor Department said the number of Americans who filed for unemployment benefits fell 42,000 last week to 338,000. The drop was far bigger than economists were expecting and an indication that fewer people were losing their jobs.
It was another slow day for Wall Street, with most investors on vacation for Christmas and only three trading days left in 2013. Approximately 1.96 billion shares traded hands on the New York Stock Exchange on Thursday, well below the daily average of 3.3 billion shares.
In corporate news:
T-Mobile rose 74 cents, or 2.3 percent, to $32.93 after The New York Times and other news outlets reported that the Sprint division of Japan’s Softbank was looking to buy the wireless carrier.
Twitter rose $3.35, or 5 percent, to $72.31. The stock is up 22 percent this week alone and 76 percent so far this month. Investors continue to bid up Twitter’s shares on optimism the social media company can increase profits from mobile advertising.