Stocks are sharply higher after a batch of economic reports offered some hope that the U.S. economy was improving.

Investors seized on encouraging readings of the labor market and Americans’ incomes on Wednesday, while shrugging off a steep fall in new home sales and manufacturing orders.

The government said first-time claims for unemployment benefits fell 34,000, to 407,000, last week. That was much better than the 435,000 new claims economists had expected. A separate report showed that Americans’ incomes rose 0.5 percent last month

The Dow Jones industrial average rose 126, or 1.1 percent, to 11,161.

The S&P 500 gained 14, or 1.2 percent, to 1,195. The Nasdaq composite index rose 45, or 1.8 percent, to 2,540.