With earnings season starting to heat up and some positive macroeconomic news to boot, the Dow Jones Industrial Average (^DJI 0.26%) shot up 84 points, or 0.6%, its biggest gain since the first session of the year. Bank of America (BAC 0.87%), American Express (AXP 0.57%), and Intel (INTC +1.14%) all reported, while housing starts and initial unemployment claims were pleasant surprises for the market.
Housing starts in December jumped more than 100,000 from the month before to a seasonally adjusted 954,000, beating analyst estimates by 65,000. That was the best new housing figure seen since 2008, before the financial crisis hit. The unemployment number was similarly promising, as only 335,000 new jobless claims were filed in the week ending January 12, significantly down from 372,000 the week before, and easily beating estimates of 370,000. That level marks the lowest seen in five years.
Back to the earnings docket. Bank of America finished down 4.2%, despite topping EPS estimates of $0.02 by a penny. Revenue, however, dropped sharply, as the financial giant struggled to clean up problems in its mortgage unit. On the call, CFO Bruce Thompson emphasized that the bank had become much healthier over the past year, saying, "We put a lot of risk behind us in 2012," and he noted increases in deposits, lower debt, and higher fees in its investment banking division. Rival Citigroup also dropped 2.9%, as it badly missed earnings, by nearly 30%, as surprise legal expenses put a dent into profits.
Reporting after hours, American Express shares dipped 1% after gaining 0.2% during the trading session. Profits at the credit card provider fell 47% due to restructuring and other one-time charges, as it put in place a plan to shed 5,400 jobs. Adjusted EPS of $1.09, however, topped estimates of $1.06. Revenue was up 38%, to $5.6 billion.
Finally, Intel had been the biggest gainer during the day, climbing 2.6% on hopes for an earnings beat, but fell sharply after releasing its quarterly report. Shares were down 5%, as profits dropped 27%, but EPS of $0.48 still beat estimates of $0.45. Investors seemed to be spooked by the chip-maker's outlook, which included $13 billion in capital spending, and a Q1 revenue estimate of $12.7 billion, below analyst estimates. Revenue in the fourth quarter fell 3%.
AT&T (T +1.26%) was also off 1.7% in after-hours trading, after warning that it would take a $10 billion pension charge in the fourth quarter. The telecom also said that effects from Superstorm Sandy digged into the quarter's earnings, as well.
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