Wall Street rallies on Citigroup's earnings, retail sales

NEW YORK Mon Oct 15, 2012 6:17pm EDT

1 of 2. Traders work on the floor of the New York Stock Exchange at the opening of the trading session in New York October 5, 2012.

Credit: Reuters/Mike Segar

NEW YORK (Reuters) - Stocks climbed on Monday, rebounding from last week's losses after Citigroup's earnings and retail sales sharply exceeded expectations.

Citigroup Inc (C.N) shares shot up 5.5 percent to $36.66 and gave the biggest lift to the S&P 500 after the third-largest U.S. bank reported quarterly adjusted earnings that surged from the year-ago quarter and beat expectations. The growth came as mortgage lending increased and capital markets results rebounded.

Results from Goldman Sachs (GS.N) are expected Tuesday. The stock gained 3.6 percent to $124.50 on Monday, while the S&P financial index .GSPF rose 1.2 percent.

Worries about third-quarter U.S. earnings have put a damper on stocks in recent weeks, with the S&P 500 falling 2.2 percent last week - its worst weekly performance in four months. But the S&P 500 is still up 14.5 percent for the year.

"It's a quiet rally after a little bit of a pullback," said Eric Kuby, chief investment officer at North Star Investment Management Corp. in Chicago.

"There is this continued sense that most money managers are trailing the index. You're not going to catch up if you're sitting in cash, so there continues to be pressure."

The three major U.S. stock indexes also drew support from optimism about retail data, which showed September retail sales rose 1.1 percent - above the 0.8 percent growth that had been anticipated.

Investors remained cautious about Europe, waiting for signs that Spain was ready to formally request a bailout, which is seen as necessary to deal with its debt crisis.

The Dow Jones industrial average .DJI rose 95.38 points, or 0.72 percent, to 13,424.23 at the close. The Standard & Poor's 500 Index .SPX gained 11.54 points, or 0.81 percent, to finish at 1,440.13. The Nasdaq Composite Index .IXIC advanced 20.07 points, or 0.66 percent, to close at 3,064.18.

Both the Dow and the S&P 500 kept above technical support levels at their 50-day moving averages. Last week's declines had left each index on the precipice of breaking below those levels.

"The market's reasonably priced, and while it's had a good move this year, I think most people have not participated so there might be an opportunity for a bit of a tailwind," said Mark Foster, chief investment officer at Kirr Marbach & Co in Columbus, Indiana.

Shares of Intel (INTC.O), the world's leading chipmaker, gained 1.2 percent to $21.73 a day ahead of its earnings report. Analysts are expected to watch Intel's gross margin figures, which have been declining in the past couple of years. [ID:nL1E8LE2DE] Intel's advance on Monday helped drive the PHLX semiconductor index .SOX up 1.5 percent.

Drugmaker shares advanced, led by Eli Lilly and Co (LLY.N), up 4.1 percent at $52.53, and Abbott Laboratories (ABT.N), up 4 percent at $72.05. The S&P healthcare index .GSPA climbed 1.4 percent.

Eli Lilly shares rose after the drugmaker said a late-stage study of its experimental gastric cancer drug met its main goal of improving overall survival. Abbott's stock gained after results from a mid-stage study of hepatitis C medicines.

Lending further support was a rebound in energy shares as U.S. crude curbed an earlier slide that had pushed the price down below $90 a barrel. The S&P energy index .GSPE gained 0.5 percent. <O/R> Brent crude rose $1.18, or 1.03 percent, to settle at $115.80 a barrel.

Profits of S&P 500 companies are seen dropping 2.3 percent this quarter from a year ago, according to Thomson Reuters data.

With about 8 percent of S&P 500 companies having reported, 58 percent of companies have topped profit expectations - less than the average beat rate of 67 percent for the past four quarters, Thomson Reuters data showed.

In other economic data, a survey showed that an index of manufacturing activity in New York state shrank for the third month in a row in October.

Volume was roughly 5.9 billion shares traded on the New York Stock Exchange, the Nasdaq and the NYSE MKT, compared with the year-to-date average daily closing volume of 6.52 billion.

Advancers outnumbered decliners on the NYSE by a ratio of 2 to 1. On the Nasdaq, more than five stocks rose for every three that fell.

(Additional reporting by Atossa Abrahamian; Editing by Jan Paschal)

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Comments (3)
ScroogeYou wrote:
So where are the Republicans to screech that President Obama massaged these numbers?

Oct 15, 2012 9:07am EDT  --  Report as abuse
rossryan wrote:
ScroogeYou -> Perhaps you are new to Reuters, but in time, you will notice that they report a rally, on average, every three days; they also tend to sink a little while after. This is business as usual.

Are you so desperate for any sign of economic relief that you’re willing to point to the little swirls and eddies on the surface of the ocean that is the market to support your chosen candidate?

By the way, I’m not a Republican, nor a Democrat, nor Tea-Party, Rave-Party, Block-Party, or what have you.

Oct 15, 2012 5:01pm EDT  --  Report as abuse
ScroogeYou wrote:
rossryan – “swirls and eddies?”

Please!?! When the “swirls and eddies” were pointing to economic meltdown, I shut down my real estate brokerage in 2000 well enough in advance to be no where near the bursting bubble.

Swirls and eddies are the results of REAL currents…

No one is saying that things will be rosy tomorrow, but it isn’t as dismal as some would like to portray. 3 to 5 years and the mess will be sorted out for the most part.

But then we still have to deal with the Student Loan bubble that is growing at a feverish pace. In the mean time, the banks that pillaged during the mortgage meltdown will pillage more.

Oct 15, 2012 5:45pm EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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