Stocks hold gains on earnings, US data

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 Zacks.com.

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%.