Stocks end at new 2009 highs

NEW YORK (CNNMoney.com) -- Stocks ended a holiday-shortened session higher Thursday, with indexes climbing to new highs for the year after upbeat reports on the labor market and durable goods orders fueled optimism about the economic recovery.

The Dow Jones industrial average (INDU) rose 53 points, or 0.5%. The S&P 500 index (SPX) rose 6 points, or 0.5%. Both gauges are at the highest level since the first week of October 2008. The Nasdaq composite (COMP) gained 16 points, or 0.7%, to the highest level since Sept. 3, 2008.

Stocks have risen for five days, and all three indexes posted gains for the week. The Dow posted a 0.5% weekly gain, while the S&P rose 1.8%. The Nasdaq added 4.3% last week.

The advance came amid low trading volumes with the market closing three hours early ahead of the Christmas holiday. The stock exchange will remain dark Friday.

Stocks opened higher after the government said the number of Americans filing first-time claims for unemployment fell more than expected last week. A separate report showed orders for durable goods outside of the transportation sector surged last month.

"Today is about as quiet as it gets and you still have the S&P making a new yearly high," said Art Hogan, chief market analyst at Jefferies & Co. "This is a market that's focusing on what next year is going to look like."

Stocks were also supported by rising oil prices, which lifted shares of energy companies. Gold prices rose as the dollar softened against the euro.

"The strong commodity complex continues to be a driver of the market," Hogan said.

Technology stocks continued to lead gainers. Shares of Apple Inc. (AAPL, Fortune 500) rose to a record trading high of $209.35 amid rumors the consumer electronics giant could release a new tablet computer in January.

Meanwhile, investors shrugged off the Senate's 60-39 vote to pass the health care bill, which was widely expected to be approved. The Senate also passed a $290 billion increase to the amount of debt the Treasury is permitted by law to have, raising the debt ceiling to $12.394 trillion from $12.104 trillion.

The gains came near the end of a strong year for the stock market. After bottoming at 12-year lows in March, stocks have rallied broadly as a flood of government stimulus money has helped the economy emerge from one of the deepest recessions on record.

For the year, the major indexes are all on track to post double-digit percentage gains. The Dow has gained over 19% so far this year, while the S&P 500 is up about 24% year to date. The Nasdaq has been the best performer of 2009, climbing about 44%.

Peter Cardillo, chief market economist for Avalon Partners, said he expects the market to continue drifting higher next week, a time of year when stocks traditionally perform well.

"The Santa rally is going to continue," he said.

Investors will have few economic indicators to set the tone for next week's abbreviated schedule. The stock exchange will be shuttered Friday for the New Year's Day holiday, and many traders will take the entire week off.

Among the reports due out next week: the S&P Case-Shiller home price index for October, a report on consumer confidence in December, and the government's weekly jobless claims data.

Analysts say trading could be choppy next week with market volumes expected to be thin. While many big investment funds have closed their books for the year, some traders may be in the market next week ahead of what is expected to be a strong month of January for stocks.

Economy: A government report showed the number of Americans filing first-time claims for unemployment insurance fell by 28,000 last week to 452,000 initial claims.

The tally was much better than expected. Economists surveyed by Briefing.com had forecast the number of first-time filers to fall to 470,000 from the previous week's 480,000 new claims.

Separately, the Commerce Department released its report on durable goods orders, showing a gain of 0.2% in November which fell short of market expectations.

Economists had projected that new orders for long-lasting manufactured goods rose 0.4% in November after a decline of 0.6% the previous month.

Excluding transportation, however, durable goods orders surged 2%, far exceeding the 1% rise economists had expected.

Overall, the durable goods report is a "good sign" for the economy, Hogan said. "The headline number is extremely volatile, but when you take out the transportation part, you have improvement on sequential basis."

World markets: Asian markets posted gains for the day. Japan's Nikkei average rose 1.5% to close at its highest level since late September. European indexes closed higher, with London's FTSE gaining 0.5%.

Bonds: The price of the benchmark 10-year note fell, driving the yield up to 3.8%.

Money and oil: The dollar was mixed against major currencies. It was down versus the euro, but edged up against the yen and the UK pound.

Crude oil rose 58 cents to end at $77.25 a barrel. This is after strong gains on Wednesday, on a report showing that crude supplies fell more than twice as much as analysts projected, for the second week in a row.

Gold for February delivery rose $10 to settle at $1,104 per ounce.