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Stock Market News for January 18, 2013

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Benchmarks finished in the green on Thursday following better-than-expected data on the housing sector and initial claims. These reports pushed the Standard & Poor 500 to its highest level since December 2007. Initial claims touched its lowest level in five years. Housing starts also touched a new high, the previous highest level having been achieved in June 2008. The financial sector was the only loser among the S&P 500 industry groups, after two major banks reported disappointing quarterly results.

The Dow Jones Industrial Average (DJI) gained 0.6% to close the day at 13,596.02. The Standard & Poor 500 (S&P 500) added 0.6% to finish yesterday’s trading session at 1,480.94. The tech-laden Nasdaq Composite Index gained 0.6% to end at 3,136.00.The fear-gauge CBOE Volatility Index (VIX) gained 1.1% to settle at 13.57. Consolidated volumes on the New York Stock Exchange, American Stock Exchange and Nasdaq were roughly 6.5 billion shares, marginally higher than 2012’s daily average of 6.45 billion shares. Advancing stocks easily outpaced decliners on the NYSE; as for 73% stocks that rose, only 24% moved lower.

The U.S. Census Bureau and the Department of Housing and Urban Development jointly reported that in December, housing starts increased to a seasonally adjusted figure of 954,000 from the revised November figure of 851,000. This was above the consensus estimate of 889,000. On a year-over-ear basis, the increase was 37%. Meanwhile, building permits increased to a seasonally adjusted figure of 903,000 from the revised November figure of 900,000. This was above the consensus estimate of 897,000. On a year-over-year basis the increase was 29%.

Housing stocks had a good run and enjoyed decent gains following encouraging news from housing sector. The SPDR S&P Homebuilders (XHB) gained 1.9%. Stocks such as PulteGroup, Inc. (NYSE:PHM), Toll Brothers Inc (NYSE:TOL), Meritage Homes Corporation (NYSE:MTH), The Ryland Group, Inc. (NYSE:RYL) and Lennar Corporation (NYSE:LEN) jumped 5.3%, 3.6%, 2.1%, 2.0% and 3.5%, respectively.

Meanwhile, the U.S. Department of Labor reported that the number of Americans filing for unemployment benefits declined to its lowest level in five years. According to the report, seasonally adjusted initial claims decreased 37,000 to 335,000 from the prior week’s revised figure of 372,000. This was well below the consensus estimate of 368,000.

Shares of Citigroup Inc. (NYSE:C) dropped 2.9%, after the company reported its fourth-quarter results. The company earnings came in below the Street’s estimates. It was negatively impacted by an increase in legal expenses. Shares of another major bank, Bank of America Corp (NYSE: BAC) dropped 4.2%. It registered better-than-expected earnings, but its profit fell short on a year-over-year basis. Shares of eBay Inc (NASDAQ:EBAY) increased 2.7% on account of robust earnings and revenue. Meanwhile, Morgan Stanley (NYSE:MS) is scheduled to report its results on Friday.

Investors were hurt by disappointing results from two major banks which pushed the financial sector into negative territory. The Financial Select Sector SPDR (XLF) lost 0.1%. Stocks such as JPMorgan Chase & Co. (NYSE:JPM), Wells Fargo & Company (NYSE:WFC), U.S. Bancorp (NYSE:USB) and Goldman Sachs Group, Inc. (NYSE:GS) slipped 0.8%, 0.2%, 1.2% and 0.1%, respectively.

Additionally, the Philadelphia branch of the Federal Reserve reported the worsening condition of the manufacturing sector in the mid-Atlantic region. The decline in the manufacturing sector did not dampen investor sentiment which was boosted by housing and the initial claims data.

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