While you were sleeping: US stocks pause ahead of Thanksgiving

Wall Street traded in a tight band and in low volumes ahead of the Thanksgiving holiday.

While the Dow Jones Industrial Average briefly rose above 17,850, it closed just 1.20 points higher at 17,813.39. The broader Standard & Poor's 500 Index fell less than a point to 2088.87, while the Nasdaq Composite Index advanced 0.3% to 5116.14.

US markets will be closed on Thursday and close early on Friday as Americans take a pre-Christmas break.

In the Dow, Pfizer rose 2.9% as investors continued to weigh the merger with Ireland-based Allergan to form the world's largest drug company. 

Deere rose as high as $US80.48 earlier in the session, after the company reported better than expected fourth quarter earnings and estimates for fiscal 2016 profit.

While weakness in global markets for farm and construction equipment hurt sales and profit, cost cuts helped mitigate the impact.

"Although our forecast calls for lower results in the year ahead, the outlook represents a level of performance that is considerably better than we have experienced in previous downturns," Deere's chief executive officer Samuel Allen says.

"This shows the continuing success of our efforts to establish a more durable business model and a wider range of revenue sources."

Consumer spending data
In new data, consumer spending rose a lower than expected 0.1% in October, the same as in September. Still, the gain kept alive expectations the Federal Reserve will lift interest rates next month.

"As far as fourth-quarter GDP goes, that is likely to keep estimates close to 2%," New York-based FTN Financial chief economist Chris Low told Reuters.

"That's enough to justify a rate hike as long as next Friday's employment report is not a disaster."

Separately, a Labor Department report shows initial claims for state unemployment benefits fell 12,000 to a seasonally adjusted 260,000 for the week ended November 21, while a Commerce Department report shows durable goods orders, excluding aircraft, climbed 1.3% in October.

Another Commerce Department report shows sales of new homes jumped 10.7% to a seasonally adjusted annual rate of 495,000 houses in October, up from a downwardly revised pace of 447,000 in September.

In Europe, the Stoxx 600 Index finished the session with a 1.4% rally from the previous close. The UK's FTSE 100 Index gained 1%, France's CAC 40 Index increased 1.5%, while Germany's DAX Index rallied 2.2%.

In the UK, Chancellor of the Exchequer George Osborne upgraded the government's forecast for the country's economic growth next year.

Meanwhile, European Central Bank policymakers are considering options such as two-tiered bank charges and broader bond purchases as they seek to stoke economic growth in the euro zone, Reuters reports, citing officials it did not name.

"The prospect of more stimulus measures from the ECB's meeting next week has also helped to boost Europe's equity markets today," Lisbon-based Banco de Investimento Global broker Steven Santos told Reuters.

Updated at 10am for Wall Street close (10am NZ time)

(BusinessDesk)