Positive economic reports power stocks higher

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(MoneyWatch) Don't tell anyone, but lost in Superstorm Sandy's wake was economic data which has been showing steady improvement. The cumulative effect of the reports is pushing stocks one percent higher in the second post-Sandy trading session.

Chances are most people didn't focus on the good news while the storm was battering the East Coast. Here's a quick snapshot:

Just before Sandy made landfall, the government reported that personal income rose by 0.4 percent and spending increased by 0.8 percent. The increase in spending is a sign of confidence in the economy, even if consumers made up the difference by saving less for a third straight month.

After the storm hit, S&P/Case-Shiller released its series of home prices indexes. The index of 20 metro areas gained 0.5 percent from a month earlier, the seventh straight month of increases. Prices are now up 2 percent from a year ago, the third consecutive year-over-year gain since 2010. Remember that 2010's gains were directly related to the housing tax credit. Excluding 2010, the last year over increase occurred in 2006. This report, along with improving existing and new home sales underscore that housing probably bottomed earlier this year.

Today, reports on jobs, manufacturing and confidence propelled stocks higher. The newly-revamped ADP report showed that private employers added a better than expected 158,000 jobs from September to October, on a seasonally adjusted basis. Separately, the Department of Labor said weekly claims dropped by 9,000 to 363,000; the 4-week moving average edged lower by 1,500 to 367,250. The monthly average is a better barometer of the overall employment trend and the results are near the low end of the range for the year. These numbers are likely to increase next week, reflecting the effect of Sandy.

The October 2012 Manufacturing ISM index increased by two ticks to 51.7 percent in October and the new orders index was at 54.2 percent, up from 52.3 percent. There have been concerns that a slowdown in global growth was hurting manufacturers and exporters, so this report may indicate that the pull-back was temporary.

The Conference Board's Consumer Confidence index rose to 72.2, the highest level since February 2008, boosted by optimism over labor market. The number of workers reporting that jobs were "plentiful" increased more than 2 percent; those who are expecting more jobs in the coming months increased to 19.2 percent from 18.1 percent; and those expecting an increase in their incomes came in at 16.7 percent from 15.9 percent.

Investors welcomed the positive economic data. The Dow Jones industrial average gained 136 points, or just over 1 percent, to close at 13,232, its strongest performance this week. The S&P 500 rose 15 points to 1,428. The Nasdaq added 43 points to 3,020.

Of course all of this market cheer could be wiped out tomorrow, if the Labor Department's October jobs report disappoints. Economists expect that 125,000 new jobs were created and the unemployment rate inched up to 7.9 percent.

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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