As earnings season gets firmly under way, "expectations" mean quite a lot to the stock market. Accordingly, the news today that housing starts in December were markedly higher than expected drove the entire market up, and the Dow Jones Industrial Average (^DJI 0.65%) ended 84 points higher, locking in gains of 0.63%, to close the day at 13,596.
Leading the Dow by virtue of a twisted form of "only on Wall Street" logic, chip maker Intel (INTC -0.16%) jumped 2.6%, as bulls expected today's earnings to be higher than expected. The after-hours announcement from Intel -- while beating forecasts -- didn't do so by "enough." After the bell, the stock gave up all its gains from the day, and then some, as profits plummeted 27% for the quarter. Intel did fall slightly short on revenue, but not by much.
Encouraged by positive housing numbers -- housing starts jumped 12.1% in December -- home-improvement retailer Home Depot (HD 1.01%) joined Intel atop the Dow Thursday, rising 1.9%. The steadily-improving real estate market is part of the reason that Home Depot stock was the Dow's biggest support in 2012, accounting for more than 17% of the index's yearly 886-point gains -- 151.31/886.58 -- from the S&P 500 Dow Jones Year in Review Adobe file sent out the other day.
Bank of America (BAC 1.46%), which jumped 2% yesterday in another case of heightened pre-earnings expectations, bit the dust, falling 4.2% today. It turns out that hopeful signs yesterday from industry peers that investment banking profits would surge failed to fully materialize, at least to the extent where they eclipsed the massive, multi-billion dollar writedowns that the bank took as a result of crisis-era mortgage lending.
Elsewhere in the markets, Chipotle Mexican Grill (CMG 0.86%) stock mounted a comeback from its dreadful 5.5% drop yesterday. Today's 3.3% rebound indicated confidence in Chipotle's newly announced decision to possibly increase prices in mid-2013, passing on the rising food costs investors worried about Wednesday to the consumer.
