Stocks rebound on positive manufacturing, employment news

Stocks rebounded Thursday on better than expected employment and manufacturing news while real estate construction fell below expectations.

The economy showed signs of generating jobs as people filing first-time claims for unemployment benefits fell 6,000 to a seasonally adjusted 439,000 last week, slightly better than the 440,000 predicted by economists, according to the Labor Department. 

Economists are predicting that the economy will add 190,000 jobs in the Labor Department report set for release Friday. 

On top of that, the U.S. manufacturing sector expanded in March at its best pace since July 2004, as factories increased production and businesses began rebuilding inventories, according to The Institute for Supply Management, a trade group of purchasing executives. The manufacturing index rose to 59.6 in March from 56.5 in February, the eighth straight month of growth. A number above 50 reflects growth. 

Economic news was mixed with real estate building still lagging behind as construction spending fell unexpectedly to its lowest level in eight years, according to a Commerce Department report. 

Spending on construction projects fell by 1.3 percent to a seasonally adjusted $846.23 billion, the lowest level since November 2002. Economists had predicted a 1 percent cut in spending. Commercial real estate is the main culprit for pulling down an economic recovery as loans go bad and lending remains restricted to consumers and businesses.

When government spending is removed, February spending for all types of construction projects dropped to $553.5 billion, the lowest since January 1999, according to the report.

The stock market is closed Friday and the bond market closes early for Good Friday.