Jan. 17 - Summary of business headlines: New five-year high on Wall Street as jobless claims tumble and housing starts surge; Intel beats profit forecasts but sales match targets; Citigroup and Bank of America still haunted by the mortgage mess. Conway G. Gittens reports.
The bulls awake from a mini-nap, taking Wall Street to a fresh five-year high... in this year's second best day of gains for the Dow and the Nasdaq. The driving force: economic data. Jobless claims tumbled to a five-year low, in the biggest one-week plunge in nearly two years. Housing starts and building permits surged to 4-1/2 year peaks in December. But the economy is not firing on all cylinders. Manufacturing activity in the Mid-Atlantic states surprisingly shrank this month as business cooled from an end-of-the year pick-up. Tech earnings on the docket: Intel beat profit predictions on quarterly sales that were in-line with the consensus. But the chip giant's revenue outlook for the current quarter is below Wall Street's. Meanwhile, the big banks continue to roll out their quarterly results. Citigroup was forced to take more than $2.3 billion in charges for layoffs and legal woes. Excluding one-time items, profits were still way below forecasts. Citigroup has a new CEO and is in the midst of a turnaround, reminds Joo-Yung Lee of Fitch Ratings. SOUNDBITE: JOO-YUNG LEE, MANAGING DIRECTOR OF FINANCIAL INSTITUTIONS, FITCH RATINGS (ENGLISH) SAYING: "Our view is that they have done quite a lot to improve their balance sheet and their liquidity. So the fundamentals look good. The problem is the earnings picture is definitely one that is weaker and that is pretty universal for the banks." That's true for Bank of America. Profits there slumped 63 percent. You can blame a $5 billion shadow from the mortgage crisis for that. Taking a look at how these stocks fared - Citigroup was down about 3 percent and BofA - down more than 4 percent. European investors were in a shopping mood thanks to encouraging sales figures from the retail sector; stock market gains seen across the board.