Stocks hold gains on earnings, US data

Earnings results for Bank of America and Morgan Stanley come in better than expected. Jobless claims and housing starts fall, while consumer prices remain unchanged. Oil price rise.

By TheStreet Staff Jan 19, 2012 8:38AM

TheStreetImage: Wall Street sign (© Corbis/SuperStock)By Kaitlyn Kiernan


Updated at 12:54 p.m. ET


Stocks were rising Thursday as investors cheered a substantial dip in jobless claims data and earnings results from Bank of America and Morgan Stanley.  

The Dow Jones Industrial Average ($INDU) was rising 19 points at 12,598. The S&P 500 ($INX) was rising 5.6 points at 1,313 and the Nasdaq ($COMPX) was gaining 20.6 points to 2,790.

Bank of America (BAC), which lost its status as the U.S.’s largest lender by assets to JPMorgan Chase (JPM) last quarter, reported a fourth-quarter profit of $2 billion, or 15 cents per share, with revenue of $25.1 billion. Analysts expected earnings of 15 cents, according to Thomson Reuters.


Morgan Stanley (MS) reported a fourth-quarter loss of 14 cents per share on revenue of $5.7 billion. However, analysts expected a loss of 57 cents on revenue of $5.57 billion.


Sentiment was lifted further after a Labor Department report showed the number of Americans filing for first-time unemployment benefits fell to the lowest level since April 2008. Initial jobless claims dropped 50,000 to to 352,000 from a revised 402,000. Economists expected claims to fall to 383,000.


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“One week is not a trend but this continues a clear downshift in claims, which emerged towards the end of last year when businesses realized that the meltdown in demand they feared, in the wake of the drop in consumers' confidence, had not happened,” Ian Shepherdson, chief economist at High Frequency Economics, wrote in a research note. “It is just about inconceivable that such a sustained downshift would not be followed quickly by substantially faster payroll gains.”


The Federal Reserve Bank of Philadelphia added to the good news with a report that manufacturing in the region expanded at a faster pace this month as employment increased. The regional Fed bank’s economic index increased to 7.3 from 6.8 last month,  but missed economist estimates that expected the index to rise to 10, according to Thomson Reuters.


France inspired investor confidence after successfully auctioning off 7.965 billion euros of bills in its first longer-term bond auction since Standard & Poor’s cut the country’s perfect credit rating to AA on Jan. 13. France, like the U.S., proved that ratings companies have little effect on its bond’s values as yields fell. Spain also tested investors as it, too, successfully sold longer-term notes at auctions for the first time since S&P slashed its rating by two levels to A.  Spanish yields fell 1.572% on 10-year notes, while inching higher on bonds maturing in 2016.


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However, optimism from successful bond auctions in Spain and France was dampened by concerns surrounding Greece’s continued talks with private investors. Greece must come to an agreement on debt write-downs before a March 20 bond payment that would force the country into a disorderly default without a second bailout. Germany's DAX closed 0.97% higher while London's FTSE added 0.68%.


Homebuilders in the U.S. also broke ground on fewer homes in December. Housing starts fell 4.1% to an adjusted annual rate of 657,000 units in December from a revised 680,000 in November, according to a Census Bureau report. Analysts had expected housing starts to fall to 675,000 units. Building permits fell 0.1% to 679,000 from a revised 680,000 in the previous month. 


Thursday will be a busy day for corporate earnings, with 81 companies scheduled to report results. After the close, West Coast technology giants Google (GOOG), Intel (INTC) and Microsoft (MSFT) will wrap up the day with earnings reports.


Analysts believe these tech companies can shake off the debt fears in Europe. Google is expected by analysts to post quarterly earnings of 96 cents a share, and Intel is expected to earn 61 cents, while Microsoft is seen earnings 76 cents.

In other corporate news, Eastman Kodak (EK), the 131-year-old photo film maker, filed for Chapter 11 bankruptcy protection. The Rochester, N.Y-based company said it obtained a $950 million, 18-month credit facility from Citigroup (C) to keep it in business.

eBay (EBAY), the online auctioneer, topped analysts’ quarterly earnings estimates late Wednesday. During the quarter, the online giant earned 60 cents a share on revenue of $3.4 billion. Wall Street was calling for a profit of 57 cents on revenue of $3.32 billion.


F5 Networks (FFIV) reported that fiscal first quarter earnings exceeded analysts’ estimates at $1.03 a share. The software maker also forecast that stronger results next quarter, seeing earnings of between $1.05 and $1.07 a share. The stock was surging 9.5% to $118.80.


Nike (NKE) announced the launch of its newest digital device for tracking fitness Thursday. The athletic-goods company unveiled the Nike+ FuelBand, which will be available for preorder at a suggested retail price of $149 Thursday, to track all movements, including running, dancing or swimming, and to set personal goals. 


Southwest Airlines (LUV) proved not all airlines are struggling Thursday morning, when the Dallas-based carrier reported that net income rose 16% in the fourth quarter. The airline said earnings rose to 20 cents a share from 18 cents a year earlier as it sees passenger revenue remaining strong. However, adjusted earnings fell to 9 cents a share from 15 cents, beating the average estimate of analysts surveyed by Thomson Reuters by 1 cent.


The Bureau of Labor Statistics said consumer prices were unchanged in December. Analysts had expected the consumer price index to climb 0.1%, according to estimates from

March oil futures were rising 65 cents to $101.41 a barrel after the American Petroleum Institute reported late Wednesday that U.S. crude oil inventories unexpectedly dropped last week. February gold futures were falling $4.40 to $1,655.50.

The dollar index was dropping 0.357%. The benchmark 10-year Treasury was falling 21/32, lifting the yield to 1.975%.

Jan 19, 2012 12:27PM

Hey Credit is a Waste- Your name says it ALL.

When you have no money, or income, or job, you can't possibly have credit-- thus Credit is a Waste!


Shouldn't you be on Wall street as part of that great freedom movement "OWC"

You know, doing something good for the world by --- uh , ummm, uhhh--- 

asking the few taxpayes left, to pay your student loans off?





Jan 19, 2012 12:23PM
MG:  Actually... capital gains first got special treatment in 1921 by the Republican congress and Warren G Harding.  Rate of 12.5% while the top income tax tier for a million + was 73%

FDR did a lot of tinkering with the guidelines and exclusions for holding period, but to say it was a Democratic invention is wrong.
Jan 19, 2012 12:22PM
Many of of the participants in these "commentary" pages ARE the village idiots.  Are you at your"job" when you waste time like me on these under-researched, or no researched proclamations from all the learned scholars on these pages?  People who "matter" and are "Players"  do not even know these pages exist.  What's one more pipeline, they are all over the world! "Republican" or Democratic" "propaganda" WHAT?- ITS THE SAME SET OF SCOUNDRALS!  Hey GEOGRAPHY DUDE-What's MIDWEST? Ohio is considered "midwest", Chicago is midwest, etc. The region is IMPORTANT to the real U.S. economy, not like the hot-brown and yellow wastelands of the southwest.  "Tilting at windmills could be a sign of other bad habits". 
Jan 19, 2012 12:20PM

Anyone want to wager Government Motors goes bankrupt again within 7-10 years?

I do not see how it could happen again?  Obama picked the folks that are running GM.  Obama annointed a car czar that never worked in the auto industy.    The UAW employees are underpaid compared to the non-union auto workers in the US.  Those UAW workers work really hard.  The vehicles GM puts out are top quality.   


GM will be fine.  You should all invest in that fine company.   

Jan 19, 2012 12:15PM

ChipperJ, probably not a lot with windmills, they don't want those near them.  Plus who want to invest in windmills (poor return on investment so far).   Also no one  want the transmission lines near them.



Jan 19, 2012 12:13PM

Today, I was cecking out Government Motors...   It is amazing that a company could have all its debt wiped out, have record sales, and generate so little profit.   It's shareholders too a beating this year with the new stock down over  a third.  The company also seems to have amassed a fair amount of debt in such a short time.   Their costs are completely out of line.


Anyone want to wager Government Motors goes bankrupt again within 7-10 years?

Jan 19, 2012 12:10PM
Instead of a pipeline build windmills on the same stretch of land. Wonder what that would do?
Jan 19, 2012 12:09PM

Actually Swagger, BHO paid around 30% if I remember right.   This whole idea of capital gains tax being less is flawed.  FDR, and the democrats created a 'capital gains tax'.   It is one of their special utopian ways of tinkering with the tax code. 


I believe all income should be treated the same, regardless of source.  Demcorats do not believe in tax eqaulity, to them some are always more equal than others. 


All income regardless of source should be taxed the same, and everyone should pay the same percentage PERIOD.   EQUAL treatment under the law.


Onkly democrats  believe FAIR means UNEQUAL....

Jan 19, 2012 12:06PM
Homebuilders in the U.S. also broke ground on fewer homes in December. Housing starts fell 4.1%?
Wait ,Wait! Was this just the opposite the other day? RE/Homebuilding was at a high we have not seen in years? LOL.
Jan 19, 2012 12:04PM

Of course no one wants a pipeline in theirback yard, refineries, paper mills, garbage dumps, windmill farms, etc...


We have 1000's of miles of pipelines.  They are far safer to transport fuilds than train or truck.

That said whats one more.  As I understand it the were going to put most of the pipeline over existing abandon rail lines.  Evidently safe enough for trains at one time. 


I think the real question is do we want the oil or not.  Obama seems to be saying we don't want the oil.   Clearly getting oil is an environmentally dangerous business.  Look no further than BP's oil spill.  Clearly the government regulators were asleep with that one.  However, considering the cost to BP, I would wager they will be far more careful than any government regulator will make them in the future.


We could always just **** down the entire oil industry over environmental concerns.  The radib far left greens would be OK with that.  



Jan 19, 2012 12:03PM

i don't see this as a USA issue but an issue for the oil industry.  if they want to work out distribution details, that's their job.  and if distribution issues interfere with usa's desire, they need to work it out some other way.  if canada wants to ship oil to china, run a pipeline across canada west to and thru alaska (no one there anyway, right?).  if canada wants to sell oil east, run their pipeline east and ship off the new england coast. 


Seems to me regardless of where the refining is done, eventuallywe need to ship the oil from Canada to the USA.  Or they will sell it to the Chinese.
Jan 19, 2012 12:03PM
U.S. crude oil inventories unexpectedly dropped last week?

Wow must be all the people driving through Mc Donald's Friday nights.

Go check it out at your local location and see what the masses are doing to cut corners.
Jan 19, 2012 12:03PM
On Tuesday, Romney disclosed that he has been paying a far lower percentage in taxes than most Americans, around 15 percent of his annual earnings.

Not that I like Romney, cuz I don't.

But any thoughts on what percentage you think BHO paid last year?

Jan 19, 2012 12:02PM



The oil is not for the US, it is to be shipped to Europe.  You will have to look up why.


And Yeah I know I find it hard to believe too.

Jan 19, 2012 12:01PM
Looks like there's no stopping this market now.......It just keeps going up for some reason.
It looks like ALL bad news in these articles, but the market doesn't care and just goes on!

Jan 19, 2012 11:58AM

I really dont like grammer queens, spelling issues and people who complain about not using paragraphs.


If I am able to read your statement and understand it then you have communicated.


But when you insult someone by calling them "imbicle", I am going to point it out.


Or maybe this is one of those spanglish words you learned since moving to texas.

Jan 19, 2012 11:54AM

Seems to me regardless of where the refining is done, eventuallywe need to ship the oil from Canada to the USA.  Or they will sell it to the Chinese.


We could build the Refinerery in Canada, I am sure CANADIAN Union workers would be all for that.   Then we could ship the gasoline down here by truck.  Way worse for the environment, afar unsafer.   I suppose we could have Canada sell the oil to the Chinese, then we could pay more for it and buy it back from them.


Obama seems bent on getting gasoline to over $5/gallon.   Well, at least the democrats will not have ANY REASON at all to complain  about soaring gasoline prices.  Maybe they can reach over $5 in time for the election...   I think people will have then have a clear choice.



Jan 19, 2012 11:54AM
Kills 20,000- 30,000 jobs but remember he is looking out for the middle class.

Smile Keystone isn't killed it's just delayed until they can solve routing and other problems. You're believing the Republican rhetoric that they're using to push through a risky project that the greedy oil producers and refiners dearly want.

Jan 19, 2012 11:51AM

i get a kick out of windmills.  that was my senior paper topic in college.  when they started building windmills near palm springs 25 years ago i thought it was pretty neat.  it was in the desert, no one was there, who cared?  today that region has grown much more populated and the people now there  don't like the look of the landscape.  granted, "they moved there" but the point is don't screw up landscape if you don't have to. 


"no one" lives in the midwest.  drive thru and you'lll see that.  of course the northeastern people hardly leave their own region.  just follow the accents and you'll understand that.  roll back the clock 200 years and people thought the grand canyon was a giant waste of land.  but is that the attitude we should have? 


i saw the recent china olympics air quality as a great example of EPA regulations that seemingly a lot of people would like to return to.  meanwhile the people who WANT this level of poor air quality do not live in it or near it. 

Jan 19, 2012 11:50AM
"His personal finances are a poster child of what's wrong with the American tax system," said Jack Blum, a Washington lawyer who is an authority on tax enforcement and offshore banking. On Tuesday, Romney disclosed that he has been paying a far lower percentage in taxes than most Americans, around 15 percent of his annual earnings. He earns $650,000 year speaking and passive income off of $250 million made from hedge funds.

Hot Yep, this guy is just what we need. Who do the Republicans think they are running this greedy SOB. Off course, if he's their candidate the election will be over by June, 2012.


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