Stocks are broadly higher today following a slew of positive economic news and otherwise ho-hum earnings from two of the nation's largest banks. As the trading day winds down, the Dow Jones Industrial Average (DJINDICES: ^DJI ) is up by 110 points, or 0.82%.
A trio of economic reports is the main catalyst for today's gains. First, housing starts rose 12.1% in December to their highest level since June 2008, according to data from the Department of Commerce. The gains were fueled by lower borrowing costs and an improving housing market.
Second, data released by the Department of Labor showed that applications for unemployment benefits fell last week to their lowest level since January 2008. According to Bloomberg News, a spokesman for the department suggested that the drop may partially reflect noise in the data following the holidays when retailers hire scores of seasonal workers.
Finally, this morning the Federal Reserve Bank of Philadelphia published its index of regional manufacturing activity, which was less upbeat. For the month of January, the index fell to -5.8. Anything below zero is indicative of contraction. The one bright spot, however, was that the portion of the index measuring forward expectations increased to 29.2 this month from 23.7 last month.
In terms of individual stocks, two of the nation's largest banks reported fourth-quarter earnings before the bell. Shares of Bank of America (NYSE: BAC ) , the nation's second-largest bank by assets, are down more than 4% after the lender recorded only $732 million in profit for the three months ended Dec. 31. A number of legal costs ate away at B of A's bottom line. Among other things, it wrote off $2.7 billion and $1.1 billion, respectively, for settlements with Fannie Mae and banking regulators. Both had to do with how Countrywide Financial, which was acquired by B of A in 2008, originated and serviced residential mortgages.
The nation's third-largest bank by assets, Citigroup (NYSE: C ) , also saw its shares decline in intraday trading following its earnings release. Last quarter was the first full quarter with Citigroup's new CEO, Michael Corbat, at the helm. Taking advantage of this, the bank charged off a number of expected and unexpected items associated with Corbat's predecessor's reign. Among other things, it wrote off $1 billion related to a restructuring and $1.3 billion associated with legal settlements and expenses.
Finally, as a result of the good news out of the housing sector, shares of homebuilders such as Toll Brothers and PulteGroup (NYSE: HOV ) are all higher. The CEOs of all of these companies have recently expressed optimism about their operations going forward. Suffice it to say, if the housing market has indeed turned around, it would be good for more than the companies that build houses.
The Foolish bottom line
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