Stocks Jump on Signs Economy Is Getting Stronger
In economic news, the Labor Department reported Thursday that initial jobless claims for the week ended Jan. 12 were 335,000, a decrease of 37,000 from the previous week's upwardly revised figure of 372,000 and the lowest since Jan. 19, 2008. The four-week moving average was 359,250, a decrease of 6,750 from the previous week's average of 366,000.
On average, economists were expecting initial jobless claims to slide to 365,000 and continuing claims to increase to 3.159 million.
Also, the Census Bureau said housing starts rose in December to a seasonally adjusted annual rate of 954,000 from a downwardly revised 851,000 in November. Building permits rose to a seasonally adjusted annual rate of 903,000 from an upwardly revised 900,000.
Economists were expecting housing starts to rise to a rate of 890,000 and building permits to come in at a rate of 903,000.
"We consider today's report quite strong," Jan Hatzius, the chief U.S. economist at Goldman Sachs, said of the claims numbers. "Overall, this morning's numbers on housing starts and permits were a positive surprise, and are consistent with continued broad improvement in housing market activity."
The housing and labor market data were strong "even though claims does have some caveats with adjustments, so the grand strength is challenged a bit," said David Ader, a strategist with CRT.
These data points were offsetting an unexpected negative read in the Philadelphia Federal Reserve's Business Outlook survey. Manufacturing activity contracted in the Philadelphia region in January as the Philly Fed's Business Outlook Survey fell to minus 5.8 in January from a sharply downwardly revised 4.6 in December. Economists were expecting a positive read of 5.8 for January.
In earnings news, Bank of America reported fourth-quarter profit of $700 million, or 3 cents a share, beating the average analyst estimate by a penny. Net revenue, however, came in at $18.9 billion, compared with estimates of $21 billion. Shares tumbled 4.2%.
Citigroup, the third-largest bank in the U.S., missed expectations in the fourth quarter, as higher legal expenses and lower reserve releases hurt profit. Shares were off 2.9% on Thursday.