Stocks rose on Thursday as stronger-than-expected economic data lifted sentiment in a lightly traded session, although weakness in Amazon kept a lid on Nasdaq gains.

The S&P 500 was again slightly higher for the year a day after concerns about Europe's debt crisis sparked a selloff that took the index into negative territory for 2011. While Italy's bond yields remaining at high levels after an auction, they were overshadowed by the positive domestic data.

Pending sales of existing homes surged to a 1-1/2 year high in November, offering more signs of a tentative housing recovery. The Dow Jones Home Construction index <.DJUSHB> rose 3.3 percent, while Toll Brothers Inc gained 2.8 percent to $20.40.

In addition, the Institute for Supply Management-Chicago's index of Midwest business activity was higher than expected in December, though it edged lower from the previous month.

Italian yields fell from recent record highs at a short-term debt auction, but yields for 10-year paper remained near 7 percent, a level near where other euro zone governments were forced to seek bailouts.

The improvement in yields wasn't as much as we'd like, but it is modestly reassuring, said Brian Lazorishak, portfolio manager at Chase Investment Counsel in Charlottesville, Virginia. Also, the data continues to be steps in the right direction, showing some signs of healing in the economy.

The Dow Jones industrial average <.DJI> jumped 99.94 points, or 0.82 percent, at 12,251.35. The Standard & Poor's 500 Index <.SPX> was up 10.13 points, or 0.81 percent, at 1,259.77. The Nasdaq Composite Index <.IXIC> advanced 13.51 points, or 0.52 percent, at 2,603.49.

Initial jobless claims rose more than expected, giving a mixed picture on the labor market.

Recent economic data, including reports on the housing market, have been largely positive, contributing to gains over the past month and the view that economic growth is picking up steam.

For the year, the S&P is flat, while the Nasdaq is down 1.9 percent. The Dow is up 5.7 percent.

Gains in the Nasdaq were limited by Amazon.com Inc , which fell 1.9 percent to $170.63. Goldman Sachs late Wednesday suggested the online retailer's sales growth in the current holiday quarter could miss Wall Street expectations.

Shares of Mosaic Co fell 1 percent to $49.78 a day after the fertilizer producer said it will cut production of phosphate, a key nutrient used for crop production, because prices have fallen to unsustainable levels.

Standard & Poor's placed Sears Holdings Corp's credit rating on review for a possible downgrade, saying the retailer's plan to close at least 100 stores may not do much to improve its performance. The stock rose 0.8 percent to $33.51.

(Reporting By Ryan Vlastelica; editing by Jeffrey Benkoe)

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