The results fell short of analysts' estimates, sending Citi's stock down 5.5 percent to $4.85 in heavy trading. Other banks also fell. Citi earned 4 cents per share, below the 7 cents analysts surveyed by FactSet were expecting.

The results were an improvement compared to the loss of $7.6 billion, or 33 cents a share, reported for the same quarter of last year. Revenue was $18.4 billion compared to $5.4 billion a year earlier.

For the year, Citigroup earned $10.6 billion on revenue of $86.6 billion. It's the first full year of profits for the bank since 2007.

More of Citigroup's customers were able to meet payments on credit cards and home loans. Its credit losses of $6.9 billion were down $805 million from the previous quarter, or 11 percent, marking the sixth consecutive quarter of declines. The reduced losses allowed the bank to release $2.3 billion from reserves it set aside for bad loans.

As expectations of an economic recovery have increased, the New York bank set aside $4.8 billion for future losses, its lowest level since the second quarter of 2007.

The aircraft maker reported Tuesday that it expects to deliver its new 787 jet between July and September.

Boeing is up 3 percent, leading the 30 companies that make up the Dow Jones industrial average. Stocks had been trading lower in the morning with Apple Inc. and Citigroup weighing on indexes. Apple fell 3.3 percent after saying that CEO Steve Jobs was taking another medical leave. The company will also report earnings after the stock market closes, along with IBM Corp. Citigroup fell 5.3 percent after reporting weak earnings.

As analysts and investors brace for earnings reports from more than a dozen major U.S. manufacturers over the next two weeks, they will eye revenue growth as one of the surest signs of health for the industrial sector over the next year.

Sales growth will be critical to profits this year, since major companies including General Electric Co, United Technologies Corp and 3M Co will likely face rising costs of everything from copper to payroll, which they had slashed going into the recession.

Cost management will matter if the sector is to continue its strong run on Wall Street. Standard & Poor's industrials group rose about 20 percent over the past year, the second-biggest gain in the broad S&P 500 index after the S&P consumer discretionary group which rose almost 26 percent.

"From a top-line, revenue side, we're going to see some modest expansion there," said Peter Klein, senior portfolio manager at Fifth Third Asset Management, in Cleveland, Ohio. "This is what I'm sort of tuning my ear to hear. And if we don't hear it, then maybe some of this ebullience that we've seen in the industrials since this summer will flatten out."

U.S. import prices increased 1.1% in December, just below the 1.2% expected. The Labor Department revised November's import increase to 1.5% and reported that import prices gained 4.8% overall in 2010, instigated by higher fuel prices since October.

The report said U.S. exports increased 0.7% in December and 6.5% in 2010. Agricultural exports, which peaked in November, led to a 6.5% increase in overall exports compared to 2009, the largest increase since 1983, when the index debuted.

Elsewhere Wednesday morning, the Department of Energy released the crude oil inventories for the week ending Jan. 7, reporting that they are at the upper limit of the average range for this time of the year. Commercial petroleum inventories increased by 900,000 barrels last week, meeting rising demand.

Crude oil futures gained $1.11 to $92.22 a barrel Wednesday morning.

The DOE reported that total petroleum products supplied over the last four weeks increased 4.1% compared to last year. Demand for gasoline increased 1.9% and distillate fuel increased 3.6%. Crude oil imports were up by 449,000 at 8.9 million barrels.

The report showed U.S. refineries slowed down production last week, possibly affected by the four-day shutdown of the Trans-Alaska Pipeline after a leak was discovered. Refineries operated at 86.4% of their capacities last week, according to the report, with 260,000 less barrels at refineries than the previous week, at 14.7 million barrels.

U.S. stocks edged lower Tuesday, as grocers weighed on the market in the wake of a broad downgrade, but an unexpected rise in factory orders kept the losses in check.

The Dow Jones Industrial Average recently shed 7 points, or 0.1%, to 11664, one day after closing at a 28-month high.

The Nasdaq Composite fell 0.4% to 2680. The Standard & Poor's 500-stock index lost 0.3% to 1268.

Traders said the market's moves will likely be modest until 2 p.m. EST, when the U.S. Federal Reserve releases the minutes from its latest meeting.

Investors are very focused on the macro-economic environment right now, said Russell Croft, co-manager of the Croft Value Fund.

"A lot of strategists and chief investment officers out there seem pretty positive for the stock market this year," he said. But "it's one thing to say you're bullish and it's another to see people act on it," he said.

Food retailers in the S&P 500 fell Tuesday after Bank of Montreal downgraded Safeway, Vitamin Shoppe, and Whole Foods to marketperform from outperform, noting limited upside. Shares of Safeway fell 3.9%, Vitamin Shoppe was off 4.9% and Whole Foods shed 3.3%. BMO also reduced its estimates for Supervalu, noting the chain's inability to drive traffic, and Kroger, saying the fiscal year 2011 consensus could be too high given the challenging environment. Supervalu tumbled 8.5%, while Kroger lost 2%.

Morgan Stanley also cut Safeway and Supervalu to underweight from equalweight, noting Supervalu's strategy to reduce prices will collide with inflationary food costs.

However, the market pared steeper earlier declines after the Commerce Department reported that U.S. factory goods orders unexpectedly rose 0.7% in November. Economists surveyed by Dow Jones Newswires had forecast a 0.1% decline.

The telecommunications sector also gained, as shares of Motorola Mobility Holdings rose 7.8% and Motorola Solutions gained 0.2% as Motorola's long-awaited split into two entities officially took place Tuesday. Motorola Mobility consists of the company's consumer-focused smartphone and set-top box business, while Motorola Solutions focuses on handheld communication devices and public-safety radios.

The dollar strengthened against both the euro and the yen. The euro reversed earlier gains to trade recently at $1.3308, down from $1.3351 late Monday in New York.

The U.S. dollar index, which tracks the currency against a basket of others, rose 0.4%. Crude-oil prices slipped, while gold futures declined. Demand for U.S. Treasurys increased, pushing yield on the 10-year note down to 3.32%.

Among stocks in focus, U.S.-listed shares of BP rose 1.9%, touching a six-month high following reports that compensation payouts for the Gulf oil spill may be much lower than expected and lingering rumors that the company is a takeover target.

Borders Group plunged 9.4% after the book retailer's Counsel Thomas Carney and Chief Information Officer D. Scott Laverty resigned. On Tuesday, a unit of closely held Ingram Industries said it would continue to supply books to Borders despite the chain's difficult financial situation.

Drugstore chain Rite Aid gained 2.4% after its same-store sales rose 0.6% from a year earlier in December, exceeding analysts' expectations and marking the first monthly growth since May 2009.