By Chuck Mikolajczak
NEW YORK (Reuters) - U.S. stocks rose on Thursday, after a batch of economic data pointed to an improving economy and investors reassessed Fed Chair Janet Yellen's comments that had fueled speculation of an earlier-than-expected rate hike by the central bank.
After several weeks of soft economic data attributed by many investors to harsh winter weather conditions, labor market data on Thursday showed the number of Americans filing for jobless benefits hovered near three-month lows last week. A report from the Federal Reserve Bank of Philadelphia showed that factory activity in the Mid-Atlantic region rebounded in March, suggesting economic momentum may be on the upswing.
"I didn't see anything that had me jumping for joy, but it seems more like the smoldering, slowly improving economy," said Stephen Massocca, managing director of Wedbush Equity Management LLC in San Francisco.
Financial shares, which are tied to the pace of economic growth, were among Thursday's biggest gainers, with the S&P financial sector index (.SPSY) up 1.7 percent. After the close, the Federal Reserve said 29 out of 30 major banks met the minimum hurdle in its annual health check.
JPMorgan Chase & Co (JPM) gained 3.1 percent to $60.11, rising above $60 for the first time since April 2000. Citigroup Inc (NYS:C) advanced 2.6 percent to $50.22.
In her first press conference as chair of the Federal Reserve, Janet Yellen on Wednesday indicated that the first increase in interest rates could come in the first half of next year. She estimated the "considerable period" between the end of the Fed's stimulus and its first rate increase at possibly six months. Analysts widely expected a hike in the second half of 2015.
"Her point is, it could be six months because if the data dictates it, they will do it. But I don't see anything in the data today that is demonstrating we have a runaway economy here," Massocca said.
The Dow Jones industrial average (^DJI) rose 108.88 points or 0.67 percent, to end at 16,331.05. The S&P 500 (^GSPC) gained 11.24 points or 0.60 percent, to finish at 1,872.01. The Nasdaq Composite (^IXIC) added 11.684 points or 0.27 percent, to close at 4,319.286.
The S&P 500 is roughly 6 points away from its record closing high, but volume has been anemic on positive market days, suggesting limited conviction behind the move. According to the latest Reuters poll of analysts, the S&P 500 is expected to end 2014 at 1,950, less than 5 percent above current levels.
Volume is expected to surge on Friday as options expiration takes place alongside multiple index rebalances. Credit Suisse estimates $14 billion in gross trading will stem from the S&P 500 index rebalance, with another $6 billion coming from rebalancing in other indexes.
Geopolitical concerns continued to be monitored as Russian troops seized two Ukrainian naval bases, including a headquarters in the Crimean port of Sevastopol.
President Barack Obama announced sanctions on Thursday against prominent Russians, including close allies of President Vladimir Putin, as Moscow raced to complete its annexation of Crimea and built up its forces in the region.
In turn, Russia imposed retaliatory sanctions on nine U.S. officials and lawmakers, warning the West it would hit back over "every hostile thrust."
While few U.S. companies have outsized exposure to the region, investors are concerned about the fallout from any escalation in tension.
Lennar Corp (LEN) reported a sharp jump in its first-quarter profit, helped by higher prices. The results came a day after KB Home (KBH) posted similarly strong results in a bullish read on the housing market. Housing data also showed U.S. existing home sales at a 19-month low in February.
Lennar's shares fell 2.5 percent to $40.32 and KB Home lost 2.7 percent to $18.21. The PHLX housing sector index (^HGX) lost 1.2 percent.
Jabil Circuit Inc (JBL) forecast 2015 core earnings above Wall Street's estimates as the struggling contract electronics maker expects to recover from the loss of its business with BlackBerry Ltd (BB.TO)(BBRY.O). Jabil Circuit's stock slid 2.8 percent to $17.74.
On the downside, the Nasdaq's gains were limited by weakness in large-cap internet shares. Amazon.com Inc (AMZN) fell 1.1 percent to $368.97 while Facebook Inc (FB.O) dropped 1.9 percent to $66.97.
Volume was light, with about 5.9 billion shares traded on U.S. exchanges, below the 6.7 billion average so far this month, according to data from BATS Global Markets.
Declining stocks outnumbered advancing ones on the New York Stock Exchange by 1,547 to 1,468. On the Nasdaq, the breadth was positive, with advancers beating decliners by 1,384 to 1,229.
(Editing by Jan Paschal)