Stocks: Off to a good start

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NEW YORK (CNNMoney)

The Dow jumped 100 points in morning trading, while the S&P 500 and Nasdaq also got a boost.

Despite a lot of choppiness in the markets lately, U.S. stocks finished higher Tuesday. All three major indexes are up for the week, although only the S&P 500 is positive for the year.

Related: Fear & Greed Index still wallowing in extreme fear

On Wednesday, the government released housing data that showed new home construction rose from February, though it was down from a year ago. It was mixed news though because building permits, a gauge of future construction activity, fell in March.

Elsewhere, there was comforting news from China. The world's second largest economy grew at an annual rate of 7.4% in the first quarter. While China's economy continues to slow, the figure was slightly stronger than economists were expecting and seemed to mollify fears of a major halt in Asia.

Earnings are the big story of the week. Yahoo (YHOO, Fortune 500) surged 7% after the company posted earnings and sales Tuesday that came in slightly ahead of expectations.

Related: Yahoo surges following first-quarter results

But Bank of America (BAC, Fortune 500) shares declined Wednesday after reporting a quarterly loss stemming from its $6 billion in litigation expenses from a settlement with the Federal Housing Finance Agency. The settlement was related to the bank misrepresenting risky mortgage securities that contributed to the housing crisis.

Intel (INTC, Fortune 500) shares popped after the company reported earnings that beat analysts' estimates by a cent.

Heavy hitters Google (GOOGL), IBM (IBM, Fortune 500) and American Express (AXP, Fortune 500) will report earnings after the bell.

Aside from earnings, Chinese Internet giant Weibo is expected to price its initial public offering after the closing bell on Wednesday. The social media powerhouse, sometimes referred to as China's Twitter, is expected to sell about $380 million in stock, putting its value at about $4 billion. This is the latest in a string of IPOs in the U.S.

Twitter (TWTR) continues its roller coaster ride. The stock was up a whopping 11% yesterday after it announced it was acquiring data startup Gnip. That optimism might have been overplayed though as shares are down almost 3% in early trading today.

Shares of SodaStream (SODA)spiked after an Israeli newspaper reported that the soda machine maker is in talks to sell a stake to a major soft-drink company.

Related: Is Tesla's downshift for real?

Investors will also be watching the latest Federal Reserve developments Wednesday when Fed chief Janet Yellen speaks at the Economic Club of New York. As with most Fed events, investors will be looking for clues as to when the central bank plans to raise interest rates.

Related: CNNMoney's Tech30

The major European markets were all rising in afternoon trading, with Germany's Dax index up by over 1%. Nearly all Asian markets ended with gains. The Nikkei in Japan surged by 3%.

First Published: April 16, 2014: 10:00 AM ET

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Legal costs hit Bank of America's bottom line

Bank of America swung to a loss in the first quarter.

NEW YORK (CNNMoney)

It's another reminder that the tentacles of the financial crisis are still squeezing Wall Street.

The nation's second largest bank by assets reported a net loss of $276 million, or five cents per share, in the first three months of 2014. That's down significantly from 10 cents per share from the same period last year.

It looks as though the bank wanted to get as many of its legal woes sorted out as possible and take a hit all in one quarter.

The loss reflects $6 billion in litigation expenses tied to legal costs, including Bank of America's recent settlement with the Federal Housing Finance Agency over mortgage-backed securities. The bank announced the $9.5 billion settlement in March. Bank of America also set aside another $2.4 billion for previously disclosed legal costs.

Related: Big banks paying U.S. for mortgage mess

"The cost of resolving more of our mortgage issues hurt out earnings this quarter,'" said CEO Brian Moynihan in a statement. But he said the bank "generated solid results" and added that it is returning excess capital to shareholders.

The Federal Reserve recently approved Bank of America's plan to buy back $4 billion in shares and boost its quarterly dividend to 5 cents.

Bank of America has been resolving various lawsuits stemming from the 2008 mortgage bust, many of which were inherited from Countrywide, the mortgage lender it bought in 2011.

The bank also reached legal agreements with Financial Guaranty Insurance Co. and Bank of New York Mellon in the first quarter.

Related: A tale of two megabanks: BofA vs. Citi

Bank of America (BAC, Fortune 500) shares fell over 3% in early trading.

"We expect shares to sell off following today's result," analysts at Nomura Securities wrote in a note to clients.

While revenue growth was in line with expectations, Nomura said the gains from fees came from "lower-quality areas," such as equity investments and debt gains.

Excluding legal fees, which totaled 40 cents a share, Bank of America earned 35 cents per share in the first quarter. That topped analysts' expectations for earnings of 26 cents per share, according to FactSet.

"We are obviously pleased to have this issue behind us," said Bruce Thompson, chief financial officer at Bank of America, referring to the settlement with FHFA.

Bank of America said revenue in the quarter was $22.8 billion.

Related: 5 Reasons why BofA is red hot

Low interest rates continue to be a headwind for the financial sector, and Bank of America was no exception. Net interest income fell 5% in the quarter to just over $10 billion.

Meanwhile, non-interest income was flat. Earnings from mortgage banking were weak and trading profits were down. But the bank reported gains in its investment and brokerage unit, along with profits from equity investments and the sale of certain debt securities.

The bank does appear to be managing expenses well. Excluding all the legal fees and costs associated with pensions, non-interest expenses declined $1.2 billion in the quarter.

Bank of America has been one of the top performing banks in the stock market this year. Even with Wednesday's decline, the stock is up more than 5% this year. Wells Fargo is the only other big U.S. bank stock that is in positive territory this year.

The results came amid a mixed quarter for the banking industry. JPMorgan's (JPM, Fortune 500) earnings disappointed investors last week, but investors cheered results from Citigroup (C, Fortune 500) and Wells Fargo (WFC, Fortune 500). Goldman Sachs (GS, Fortune 500) and Morgan Stanley (MS, Fortune 500) will report later this week.

First Published: April 16, 2014: 7:59 AM ET

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Detroit reaches deal limiting pension cuts

Under deals reached Tuesday, Detroit retirees won't suffer as deep a cut in their pensions as had been proposed.

NEW YORK (CNNMoney)

If approved, the deals would significantly limit proposed cuts in pension benefits compared to what had previously been proposed.

The first deal was reached with the Retired Detroit Police and Fire Fighters Association, which represents more than 80% of Detroit's retired public safety workers. Retirees would suffer no cuts to their current pension benefits and would receive nearly half of their annual cost of living increases moving forward.

Later Tuesday, the city struck a tentative agreement with the General Retirement System, an even larger fund that covers civilian workers for most city departments.

The general fund was in worst financial shape than the one that covered police and fire fighters. Detroit media reports say those retirees will see a 4.5% reduction in benefits and lose their cost-of-living adjustment altogether.

Both sets of cuts are far smaller than the those proposed in February by Kevyn Orr, the emergency manager overseeing Detroit's finances and bankruptcy proceedings.

In laying out his original plan to reorganize Detroit, Orr proposed a cut of up to 34% for most retirees, and up to a 14% cut for police and fire.

Related: How Detroit's bankruptcy impacts my life

The city, which filed for bankruptcy last July, has proposed shedding nearly $10 billion in unfunded liabilities in the largest municipal bankruptcy ever. More than $3 billion of that gap was the estimated underfunding in pension funds.

The biggest liability on Detroit's books is the cost of health care for current and future retirees and their families. And retirees are likely to see deeper cuts in their original coverage as part of this deal. Bankruptcy court mediators said Tuesday a fund would be established for retiree health care costs but did provide details.

Related: Detroit to auction vacant homes online

The deals reached Tuesday still need the approval of the trustees of the pension funds, as well as rank-and-file city retirees and workers.

The city is preparing to send out ballots to tens of thousands of creditors, including workers and retirees who will be asked to vote in favor of cutting their pension benefits. While it may sound counter-intuitive, Orr has said a "no" vote would result in deeper pension cuts.

Arthur Versace, a 62-year-old retired fire captain who currently receives around $45,000 a year from his pension, said that he would "definitely" vote in favor of the deal.

"There is no way I'd say no," he said. "I think you'd be crazy not to take that."

Orr has repeatedly pressured labor groups to negotiate so the city can move forward from its historic bankruptcy proceedings, which have already racked up millions in legal and consulting fees, and return focus to providing essential city services.

Tuesday's deals will ultimately rely on funding provided by a "grand bargain" offered by private foundations, state officials and the Detroit Institute of Arts that pledged $816 million toward retiree pensions. In return, Detroit would relinquish control of city-owned art to the museum.

But the city's exit from bankruptcy will eventually rely on the final approval of bankruptcy judge Steven Rhodes.

Michael Sweet, a California-based attorney at Fox Rothschild and expert in municipal bankruptcy, said this is the most significant step Detroit has taken yet toward emerging from bankruptcy.

"This is a real feather in Kevyn Orr's cap. Having retirees go into court with him on a plan would send a very strong message to the court and other creditors," he said.

Sweet said this kind of agreement seemed unlikely not long ago given the positions being staked out by both Orr, the pension funds and the city's unions, but "pressure makes diamonds."

--CNN's Poppy Harlow contributed to this report.

First Published: April 16, 2014: 7:31 AM ET

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Housing, food costs on the rise

NEW YORK (CNNMoney)

The Consumer Price Index (CPI) rose 0.2% in March, slightly higher than 0.1% economists had forecast. Year over year the CPI is running at 1.5%.

The Bureau of Labor Statistics said increases in the shelter and food costs accounted for most of the rise.

Consumers are especially feeling the hike at the grocery where beef is at a record high and milk and some vegetables are also climbing in price. The official food index measure increased 0.4 percent in March.

Related: Beef prices hit record high

Medical care, clothing and airlines fares also increased.

The one area consumers aren't feeling the pinch is at the gas pump. The energy index, in contrast, declined slightly last month as decreases in gas and fuel oil more than offset increases in electricity and natural gas.

"Today's report shows that prices seem well contained, unless, of course, you had to go out and buy food or heat your house," said Joel Naroff , president and chief economist at Naroff Economic Advisors.

For investors, the latest data doesn't alter much about expectations that the Federal Reserve will hold the interest rate at its historically low level for now.

"Today's report won't change the mind of anyone at the Federal Reserve regarding their views on inflation," Naroff added.

Federal Reserve Chairman Janet Yellen spoke this morning before the Federal Reserve's Bank of Atlanta's 2014 Financial Markets Conference. In prepared remarks, she focused more on the banking sector then macroeconomic policy.

Yellen said that the Fed was actively considering additional measures to ensure banks are back to full health.

"Some of these measures -- such as requiring firms to hold larger amounts of capital, stable funding, or highly liquid assets based on use of short-term wholesale funding -- would likely apply only to the largest, most complex banking organizations," said Yellen.

She will give closely watched remarks tomorrow at the Economic Club of New York.

First Published: April 15, 2014: 9:23 AM ET

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Germany outlook sours on Ukraine concerns

Concerns are growing about how the crisis in Ukraine could impact the trading relationship between Germany and Russia.

LONDON (CNNMoney)

German economists and analysts are growing more cautious about the country's near-term prospects, according to a widely respected survey from the Centre for European Economic Research.

This is the second consecutive month the survey has mentioned Ukraine as a key risk factor for Germany -- though the report also showed experts were the most optimistic they've been about the current economic situation since July 2011.

The high level of optimism may be another reason behind the cautious outlook for the future, the report noted.

Germany's trade relationship with Russia -- worth over €76 billion ($105 billion) last year -- could suffer if western nations impose further sanctions on Russia for its actions in Ukraine.

Related: Russia fallout pushes Europe to develop shale gas

Ukraine and western countries maintain that Russia is trying to destabilize parts of eastern Ukraine, though Russian officials have denied these accusations. Last month, Russia took control of Ukraine's Crimea region.

Germany is Russia's largest trading partner in Europe and more than 6,000 German companies do business with Russia. Germany also relies on Russia for nearly half of its natural gas, and concerns are rising that Russia may taper its gas supplies to Europe.

German stocks have taken a hit, with the benchmark DAX index declining by about 3% since the start of the year, compared with slim gains for the broader European market.

First Published: April 15, 2014: 8:33 AM ET

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Stocks: Trying to hold on to gains

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NEW YORK (CNNMoney)

U.S. stocks gained in early trading following upbeat reports from blue-chip companies Coca-Cola (KO, Fortune 500) and Johnson & Johnson (JNJ, Fortune 500).

But the Dow Jones Industrial Average, S&P 500 and the Nasdaq were all in slightly negative territory by 10:30a.m. ET. Minutes later the Dow and S&P bounced back to gains.

Corporate earnings are in focus this week with nine Dow companies and 10% of the S&P 500 set to release first quarter results.

Overall, earnings in the quarter are expected to fall 1.6% versus last year, according to FactSet Research, although many of the early corporate reports have been better than expected, including Johnson & Johnson today and Citigroup yesterday.

Related: Things are looking up for Citigroup

Stocks have been choppy over the past few weeks as concerns about the true valuations of so called "momentum stocks," including many high-flying technology and biotech companies. But popular tech stocks like Facebook (FB, Fortune 500) and Twitter (TWTR) rebounded yesterday and are up today.

Google (GOOGL), however, is down today after announcing a major acquisition of drone maker Titan Aerospace.

Investors are looking to the latest corporate and economic reports to set the tone, said Art Hogan, chief market strategist for Wunderlich Securities.

"We're moving into the heart of earnings season now," he said."We've got a lot of financial reporting this week. The bars are set low enough that earnings expectations are in line with reality."

Related: Fear & Greed Index slides into extreme fear

Meanwhile, the yield on the 10-year Treasury note sank after the government released its monthly inflation report. The benchmark yield fell to 2.63% from 2.65% late Monday. Bond yields fall when prices rise.

The Consumer Price Index rose 0.2% in March, compared with the 0.1% rise economists had predicted. Excluding food and energy prices, the index increased 0.1%, matching expectations.

A measure of manufacturing activity in the New York area unexpectedly fell in April. The so called "empire index" fell to 1.3 this month, according to the Federal Reserve Bank of New York. Economists were expecting an increase.

U.S. stocks closed higher Monday after a choppy day of trading, snapping a two-day losing streak that roiled the markets. All three indexes are still down for the year.

Trading volume is expected to be light this week, with many market participants taking time off for the Passover holiday. U.S. markets will be dark on Friday in honor of Good Friday.

Related: CNNMoney's Tech30

European markets are down with tension in Ukraine weighing on sentiment. Germany continues to take the biggest hit as its economy has the closest ties to the tense region.

"Ukraine has the ability to disrupt the entire focus on this market if it escalates," said Hogan, though he said that Wall Street is more focused on earnings season for now.

Asian markets closed with mixed results.

First Published: April 15, 2014: 9:51 AM ET

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Russian ruble rattled by renewed Ukraine unrest

The Russian ruble has declined by roughly 9% versus the U.S. dollar since the start of 2014.

LONDON (CNNMoney)

The ruble declined by roughly 0.7% Monday versus the U.S. dollar -- not far from the lows seen in mid-March. Russia's main stock market index also dipped by nearly 2% before recovering slightly. The Russian Micex index has declined by more than 10% since the start of the year.

Investors are growing concerned again about increasingly tense relations between Ukraine and Russia over turmoil in Ukraine's eastern region.

European and emerging markets were declining and crude oil prices on the NYMEX hit a six-week high before edging back down.

Ukraine and western nations are accusing Russia of deliberately trying to destabilize parts of eastern Ukraine ahead of national elections in late May. Russia's foreign minister Sergey Lavrov denied that Russian forces were active in the east.

Related: Investors dip a toe back in emerging markets

Last month, Russia took control over Ukraine's Crimea region.

Western nations, in an attempt to protect Ukraine and punish Russia, have issued sanctions against some individuals and firms responsible for the unrest.

British foreign secretary William Hague said more sanctions may be needed.

"Further sanctions have to be the response to Russia's behavior," Hague said Monday at a meeting of European Union foreign ministers in Luxembourg. Hague said the ministers would need to negotiate "much more far-reaching" punishments against Moscow.

Related: IMF slashes Russia growth forecast

Earlier this month, the International Monetary Fund slashed its economic growth forecast for Russia and warned of a wider economic fallout if the Ukraine crisis escalates.

The IMF expects Russia's oil-rich economy will grow by 1.3% in 2014. That compares with its January forecast of 1.9%.

Other forecasters, including the World Bank and some in the Russian government, expect a much weaker outcome due to a flight of capital and an emergency interest rate hike.

First Published: April 14, 2014: 9:27 AM ET

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