U.S. stocks ended higher after the latest data on labor market and consumer sentiment came in better than expected, showing the recovery was gaining some strength at the end of the year.

The Standard & Poor's 500 was up 10.28 points, or 0.83 percent, to 1,254.00. The Nasdaq Composite Index rose 21.48 points, or 0.83 percent, to 2,599.45.

The latest bit of optimism on Wall Street came after a latest report showed the battered jobs market finally picked up.

The Labor Department said on Thursday that the number of people applying for jobless benefit dropped 4,000 to a seasonally adjusted 364,000 last week, the lowest level since April 2008.

The four-week average of initial claims, a less volatile gauge, fell for the 11th time in 13 weeks and stands at the lowest since June 2008.

Ian Shepherdson, Chief U.S. Economist of High Frequency Economics said the data was the third straight substantial downside surprise.

"This is great news: One unexpectedly low number can easily be a fluke; two are interesting; three are telling us something real is happening in the labor market," he said.

Adding to the gains, consumer sentiment stayed on an upswing, improving for the fourth straight month to a six-month high, according to data released Thursday from the University of Michigan and Thomson Reuters.

Meanwhile, the index of U.S. leading indicators climbed more than forecast in November, a sign that the world's largest economy will keep growing in early 2012.

The Conference Board said on Thursday that its gauge of the outlook for the next three to six months rose 0.5 percent in November.

Disappointingly, the government lowered its estimate of U.S. economic growth in the third quarter to an annual rate of 1.8 percent from 2 percent, confirming the state of the recovery was weaker than feared. However, the data failed to hold back the rally.

VietNamNet/Xinhuanet