Market Wrap: U.S. Stocks Close Week Higher on Optimistic Data, Payroll Tax Cut Extension

Markets edged up Friday, extending gains seen throughout most of the week, as optimistic data on durable goods and new homes sales offset lackluster consumer spending and signaled U.S. strength against the Eurozone crisis.

On the last day of trading before Christmas, major indices brought a hint of good tidings, with the S&P 500, the Dow Jones Industrial Average and the Nasdaq Composite all recording increases.

The S&P 500 closed the light trading day up 11 points, or 0.9 percent, advancing a four-day rally that erased the index's decline for the year by pushing it up 0.6 percent.

The Dow climbed 124 points, or 1 percent, while Nasdaq added 19 points, or 0.74 percent.

Better-than-expected economic data out this week boosted confidence in the market and provided hope that the U.S. might weather the European financial storm.

Sales of new U.S. single-family homes in November registered a 1.6 percent month-on-month increase and a 9.8 percent jump over the prior-year period, with the 315,000 total beating economists' estimate of 313,000.

Durable goods orders jumped 3.8 percent in November -- following flat levels in the prior month -- beating forecasts of a 2 percent increase.

Both November's new homes data and gains in durable goods orders offset lower-than-expected consumer spending for the month, which edged up 0.1 percent versus expectations of 0.3 percent.

Also adding good cheer to the markets was news that Congress on Friday passed a measure that would extend a two-percentage point payroll tax increase by another two months, effectively putting off a decision on the tax cuts until end-February.