Dow closes at '09 high in short session

NEW YORK - Stocks ended a holiday-shortened session yesterday at highs for the year after upbeat reports on unemployment and orders for durable goods.

A weaker dollar also helped buoy the market, lifting energy and materials stocks. Christmas Eve trading was extremely light, and the session was shortened by three hours for the holiday.

The encouraging signs of the labor market and consumer demand helped assuage investors who had been disappointed Wednesday by an unexpected plunge in new-home sales last month.

New claims for unemployment benefits fell 28,000, to 452,000, in the week ended Dec. 19, the Labor Department reported, the latest sign of improvement in the job market. It was the best figure since September 2008, just before the credit crisis peaked, and was better than the 470,000 new claims economists had predicted.

In Pennsylvania, new claims - those filed by workers just laid off - fell 14,302, which state officials attributed to fewer layoffs in the construction, service, transportation, and transportation-equipment industries. New Jersey's claims were down 834. The state figures are for the week ended Dec. 12.

Nationally, the four-week average for claims, which smooths out fluctuations, fell in the week ended Dec. 19 for the 16th straight week.

Separately yesterday, the Commerce Department said orders to factories for durable goods excluding the volatile transportation sector rose 2 percent last month, double what analysts expected.

Stocks have managed to push higher in December on optimism about the economy, but at a more subdued pace than in recent months. The Standard & Poor's 500 index is up 66.5 percent since hitting 12-year lows in March.

This week's trading pattern reflected the market's recent cautious tone. On Monday, stocks shot higher as another wave of corporate dealmaking boosted investors' optimism. Two days later, shares barely budged after the disappointing report on housing.

"The news on balance is pretty good," said Uri Landesman, head of global growth, ING Investment Management. "The market continues to inch higher."

The Dow Jones industrial average rose 53.66, or 0.51 percent, to 10,520.10. The Standard & Poor's 500 index rose 5.89, or 0.53 percent, to 1,126.48, while the Nasdaq composite index rose 16.05, or 0.71 percent, to 2,285.69.

Rising shares outnumbered decliners about 3-1 on the New York Stock Exchange, where volume came to 319.3 million shares, compared with 384.8 million Wednesday.

Trading was slow all week, which can exaggerate swings in stock prices.

Volume is likely to remain light next week, which will be shortened by the New Year's Day holiday Friday. Outside of readings on home prices and consumer confidence, there will be few economic reports to drive trading.

In industry news, health-care stocks were little changed after health-care legislation cleared the Senate. Some analysts said the sector could have fared much worse in the bill.

The ICE Futures U.S. dollar index, which measures the dollar against other currencies, fell 0.1 percent. Gold prices climbed back above $1,100 an ounce, while oil prices rose 96 cents to close at $77.63 a barrel on the New York Mercantile Exchange.

Commodities prices tend to rise when the dollar weakens because they become more attractive to foreign investors.