U.S. stocks advanced, following yesterday’s decline in the Standard & Poor’s 500 Index, as housing and labor market data signaled the world’s largest economy is weathering Europe’s sovereign debt crisis.

Stocks gained after the number of Americans signing contracts to buy previously owned homes rose more than forecast in November. Fewer Americans filed applications for unemployment benefits over the past month than at any time in the past three years, a sign the U.S. labor market is on the mend. Italy auctioned 7.02 billion euros ($9 billion) of bonds, falling short of the target, as borrowing costs declined in its final debt sale of the year.

Dow 12,250.75 +99.34 +0.82%, Nasdaq 2,606.28 +16.30 +0.63%, S&P 500 1,259.20 +9.56 +0.77%

Financial, industrial and commodity shares led the gains in the S&P 500 among 10 industries. Bank of America Corp. (BAC), Caterpillar Inc. (CAT) and Alcoa Inc. (AA) added at least 0.9 percent. Bank of America rose 2 percent to $5.39, after falling 5.6 percent over the previous two days. Caterpillar, the world’s largest construction and mining-equipment maker, increased 0.9 percent to $90.18. Alcoa, the largest U.S. aluminum producer, advanced 1.2 percent to $8.62.

A gauge of homebuilders in S&P indexes jumped 3 percent as all of its 12 stocks gained. PulteGroup Inc. and Lennar Corp. climbed more than 3.4 percent as homebuilders rallied. PulteGroup, the largest homebuilder by revenue, added 4.5 percent to $6.22. Lennar climbed 3.4 percent to $19.62.

Mosaic lost 1.3 percent to $49.63. The world’s largest producer of phosphate fertilizer said it will cut output by as much as 250,000 metric tons through the first quarter of 2012.

Amazon slumped 1.7 percent to $170.92 for the biggest retreat in the S&P 500. Data from ComScore show the online retailer’s fourth-quarter revenue may be $17.9 billion, less than the average analyst estimate of $18.2 billion, according to Goldman Sachs Group Inc.’s Heather Bellini.