(By Salman - iStockAnalyst Writer)US stocks advanced on Wednesday on better than expected economic data. Shares also rose as US mortgage rates fell to the lowest in more than three decades.  

The Dow Jones Industrial Average gained 108 points or 1.25% to finish at 8,776.39. The S&P 500 added 12.61 points or 1.42% to 903.24. The Nasdaq Composite jumped 26.33 points or 1.70% to 1,577.03.

Year to date, the Dow Jones Industrial Average declined 33.8% it's worst since 1931. S&P 500 fell 38.5%, the largest drop since 1937. For the year, Nasdaq Composite was down 40%, it's worst year on record.

A release by Department of Labor on Wednesday showed number of Americans filing first- time claims for unemployment benefits dropped by 94,000 to 492,000 in the week ending Dec. 27. Economists had forecast jobless claims to drop to 575,000. The four-week average of seasonally adjusted initial jobless claims, a less volatile gauge, fell 5,750 to 552,250. Continuing claims for the week ending Dec. 20 jumped 140,000 to 4.51 million, a 26 year high.

The mortgage rates in the United States hit a new 37-year low led by the benchmark long-term mortgage rate, while the short-term mortgage rate remained mixed in the latest week, a release on Wednesday showed. Home funding company Freddie Mac said in a report that its average rate on a 30-year fixed mortgage dropped for the ninth consecutive week to 5.10% for the week ending Dec. 31 with an average 0.7 point, down from 5.14% a week earlier.

Financial stocks finished mostly higher. The U.S. Federal Reserve said on Tuesday that it will start purchasing mortgage-backed securities next month under a program announced in January. Bank of America Corp. (NYSE: BAC) jumped 84 cents or 6.34% to $14.08. Goldman Sachs (NYSE: GS) increased $2.33 or 2.84% to $84.39. Morgan Stanley (NYSE: MS) soared 85 cents or 5.60% to $16.04.American Express Co. (NYSE:AXP) surged 55 cents or 3.06% to end at $18.55.

Shares of diversified firm General Electric Co. (NYSE: GE) finished at $16.20, up 38 cents or 2.40%.

Boeing Co. (NYSE: BA) advanced $1.42 or 3.44% to $42.67. Equipment maker Caterpillar Inc. (NYSE: CAT) gained $1.01 or 2.31% to close at $44.67.

Alcoa Inc. (NYSE: AA), the largest US aluminum producer, rallied 57 cents or 5.33% to $11.26.

Drug maker Merck & Co. (NYSE: MRK) climbed 80 cents or 2.70% to $30.40.

Among automaker, General Motors Corp (NYSE: GM) plunged 60 cents or 15.79% to $3.20. Ford Motor Co. fell 5 cents or 2.23% to $2.29.

Energy stocks rose. Exxon Mobil (NYSE: XOM) and Chevron Corp. gained 1.58% and 0.80% respectively.

Meanwhile, Dell Inc.(NYSE: DELL) , the world's No. second largest PC maker announced on Wednesday that Mike Cannon, president of global operations, will retire effective Jan. 31, and Mark Jarvis, chief marketing officer, will leave the company this fiscal quarter.

Swiss banking giant UBS AG (NYSE: UBS) announced on Wednesday that it has sold 3.4 billion Bank of China Ltd. shares in a placement to institutional investors.

Credit Suisse said on Wednesday that it has sold part of its Global Investors business to Aberdeen Asset Management Plc of UK for 250 million pounds ($361 million) in stock.

According to reports, privately held chemical firm LyondellBasell Industries AF is contemplating bankruptcy.

European stocks gained. The U.K. FTSE rose 41.49 points or 0.94% to 4,392.68.

Asian stocks settled mixed. Hong Kong's Hang Seng Index rose 151.98 points or 1.07% to 14,387.48. Singapore's Strait Times fell 9.09 points or 0.51% to 1,761.56.

NYMEX crude oil for February delivery soared $5.57 or 14% to settle at $44.60.

Disclosure: Author does not own any of the stocks discussed here.