Major Indexes Higher After Bond Auction

A surge in oil prices and a successful Treasury auction countered more concern over the housing sector.

A day after a late swoon left the major indexes in a deep hole, stocks were up Thursday, as traders weighed spotty housing data against an unexpected decline in oil inventories and a strong 7-year note auction. The Dow Jones Industrial Average picked up 103 points at 8403. The Nasdaq gained 20 at 1751, and the S&P 500 increased 13 at 906.

The housing sector showed more signs of weakness Thursday. The annual rate of new home sales missed consensus estimates, falling to 351,000 in April, the Commerce Department said. The report comes at a time of uncertainty for the sector. Earlier data had suggested the market may have reached a bottom, but recent reports, including a disappointing reading of the Case-Shiller Home Price Index earlier this week, suggest otherwise.

The housing data sapped early enthusiasm on optimistic data from the manufacturing and labor sectors. A report released Thursday showed durable goods orders rose last month by more than economists had expected.  Separately, the labor picture improved last week, as fewer people applied for unemployment benefits. Jobless claims came in at 623,000, below consensus estimates.

Before today's data, the White House offered broad praise of the economy. "When you look at the economy right now, I think it's safe to say we have stepped back from the brink, that there is some calm that didn't exist before," President Obama said late Wednesday at a fund-raiser for the Democratic National Committee in Beverly Hills, Calif. (Not everyone agrees.)

In Detroit, General Motors (GM) said it moved closer to a deal with its bondholders. This new deal would make the federal government a 72.5% owner of the firm. Meanwhile, bondholders would eventually get 10% of the company's equity and warrants on 15% more. The deal, however, does not mean the company won't declare bankruptcy. That option is still on the table. 

In finance, the U.S. plan to take bad debts off the hands of the nation's banks is drawing less interest than expected, The Wall Street Journal reported, citing anonymous sources. The Legacy Loan Program, part of a billion-dollar initiative to get the government and the private sector to shoulder the nation's poor invesetments, has put off several firms, some of whom say it hinges too much on the political environment in Washington.

The Treasury sold 7-year notes, the last of a $101 billion sale this week. Prices held onto small gains, according to Marketwatch. 

World markets were mixed. Asia finished higher, as Japan's Nikkei climbed 0.1% and Hong Kong's Hang Seng jumped 5.3%. In Europe, the U.K.'s FTSE stood down 0.7% in afternoon trading.

In energy, crude prices continued to rise after a decline in inventories. Oil traded up $1.30 at $64.75 a barrel.