Dow Climbs as Traders Parse Data, Earnings

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The blue chips edged higher as traders mulled mixed economic data and stronger-than-expected earnings from two financial giants.

Today's Markets

As of 3:07 p.m. ET, the Dow Jones Industrial Average rose 28.6 points, or 0.23%, to 12608, the S&P 500 rose 5.6 points, or 0.43%, to 1314 and the Nasdaq Composite climbed 17.2 points, or 0.62%, to 2787.

After rising to the highest level since July, the markets are poised to tack on gains again on Thursday. Shares of blue-chip Bank of America (NYSE:BAC) and investment bank Morgan Stanley (NYSE:MS) were solidly higher after both financial behemoths unveiled strong quarterly reports as compared to expectations.

Bank of America posted fourth-quarter earnings of 15 cents per share on $25.1 billion in revenue, net of interest expense. Analysts were expecting the bank to earn 15 cents on $24.1 billion. Morgan Stanley's (NYSE:MS) quarterly loss of 14 cents per share on continuing operations was narrower than the 57-cent loss analysts forecast. Morgan's results come a day after Goldman Sachs (NYSE:GS) revealed much strong-than-expected per share profits.

Data Deluge

Traders also had a deluge of data to parse through.

New claims for unemployment benefits fell to 352,000 last week from an upwardly revised 402,000 the week prior, a drop of 50,000. Economists had expected a drop of only 14,000. Claims are at their lowest level since the week ended April 19, 2008.

Inflation at the consumer level was unchanged in December, compared with expectations of a 0.1% increase. Excluding the food and energy components, the so-called core reading was up 0.1%, which was in-line with economists’ estimates.

"After a recent spike in headline prices, the [inflation report] indicates that inflation worries should become less of a problem for analysts and we expect further declines in the rate," BTIG Chief Global Strategist Dan Greenhaus wrote in a note to clients following the report.

Meanwhile, on the new-home front, housing starts fell 4.1% in December to an annualized rate of 657,000, shy of estimates of  680,000. Housing permits ticked 0.1% lower during the month to a 679,000-unit rate, also less than the 680,000-unit rate that had been expected. That market has been slow to recover because of high inventory, tight credit conditions and stubbornly low prices.

The Philadelphia Federal Reserve's gauge of manufacturing in the mid-Atlantic region showed continued expansion in January. The index hit 7.3 for the month, from 6.8 in December, missing expectations of a reading of 10. Readings above 0 indicate expansion, while those below point to contraction.

Strong Bond Auctions Boost European Sentiment

On the European front, Spain sold 6.61 billion euro in medium and long-term bonds, topping its target of 4.5 billion. This is the second-straight week the country saw high demand for its bonds, helping to ease concerns that the country may run into difficulty financing itself on the private market. Indeed, according to an analysis Thursday by London-based Markit, Spain has now issued more than 19% of its entire issuance for the year.

France also had a strong debt auction as traders shrugged off Standard & Poor's downgrade of the country one notch from triple-A last week.

The euro rose by 0.44% to $1.292, its third-straight day of gains. Meanwhile, the U.S. dollar was off 0.31% against a basket of world currencies.

Commodities were mixed. The benchmark crude oil contract traded in New York fell 20 cents, or 0.2%, to $100.39 a barrel. Wholesale RBOB gasoline dipped 0.34% to $2.816 a gallon.

In metals, gold was down $5.40, or 0.33%, to $1,654 a troy ounce.

Foreign Markets 

European blue chips rallied 1.9%, the English FTSE 100 rose 0.68% to 5,741 and the German DAX climbed 0.97% to 6,416.

In Asia, the Japanese Nikkei 225 gained 1% to 8,640 and the Chinese Hang Seng jumped 1.3% to 19,943.