Dow, Nasdaq hit multiyear highs

Investors sent U.S. stocks barreling upward Thursday, buoyed by encouraging news about jobs and housing.

The Dow Jones industrial average rose 123.13 points to close at 12,904.08, its third triple-digit gain this year. It was the highest close for the Dow since May 19, 2008, four months before the worst of the financial crisis.

As the Dow moved to within sight of 13,000, applause broke out at the closing bell on the floor of the New York Stock Exchange.

A key factor in the stocks' rise was the news that the number of people seeking unemployment benefits in the United States fell to the lowest point in almost four years last week, the latest signal that the job market is steadily improving.

Weekly applications for unemployment benefits dropped 13,000 to a seasonally adjusted 348,000, the Labor Department said Thursday. It was the fourth drop in five weeks and the fewest number of claims since March 2008.

When applications drop below 375,000, it usually signals that hiring is strong enough to lower the unemployment rate.

"Most indicators are pointing in the same direction: a healthy job market," said Jeremy Lawson, a senior economist at BNP Paribas. The additional jobs will provide more income for consumers and support greater spending, an importance source of growth.

Also cheering investors: while construction of single-family homes cooled slightly in January, a rise in permits suggested builders were growing more confident that more buyers are ready to come off the sidelines.

The Standard & Poor's 500 index rose 14.81 points to 1,358.04, its highest close in 9 1/2 months. The Nasdaq composite, which has had an even stronger year than the Dow and S&P and is trading at its highest since 2000, rose 44.02 points to 2,959.85.

The market has moved higher this year despite mostly incremental and vague news about the Greek debt crisis and sometimes conflicting reports on the U.S. economy.

"I think we're floating on air. There's not much going on," said Ben Schwartz, chief market strategist at Lightspeed Financial. He warned there could be volatility ahead for the market.