By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks gained ground Monday,
taking back some of the ground lost last week in a tech-led selloff
as investors cheered results from Citigroup Inc. and took comfort
in a stronger-than-expected rise in March retail sales.
Stocks opened strongly to the upside before trimming the initial
advance. The Dow Jones Industrial Average (DJI) saw a triple-digit
rise shortly after the opening bell and remained up 76.57 points,
or 0.5% at 16,103.32 in recent action. The S&P 500 (SPX) rose
9.37 points, or 0.5%, to 1,825.06.
The Nasdaq Composite (RIXF), which ended Friday with its biggest
weekly percentage decline since the week ending June 1, 2012 as
so-called momentum stocks across the tech sector were gutted,
rebounded nearly 1% in early action but then trimmed the advance.
The index was up 15.26 points, or 0.4%, at 4,014.99.
The tone was set earlier in the morning as stock-index futures
extended gains after data showed retail sales jumped 1.1% in March,
marking the biggest rise since September 2012 and topping forecasts
for a gain of 0.9%. February sales were raised to show a 0.7% gain
from an initial estimate of 0.3%.
(Read more: Real news in retail sales report is absence of bad
news:
http://www.marketwatch.com/story/real-news-in-retail-sales-report-is-absence-of-bad-news-2014-04-14.)
"Significant strength in consumer spending last month provides a
strong challenge to the bearish tone of late -- not that much of
the bout of selling was driven by concern for the health of the
economy," said Andrew Wilkinson, chief market analyst at
Interactive Brokers in Greenwich, Conn.
The data cheered investors as it offered some reassurance that
soft economic data earlier this year was attributable to extreme
winter weather.
"The amelioration of the chilly winter possibly had much to do
with the latest reading, but the snapback in dollars spent was
tremendous," Wilkinson said, in a note.
"The winter slumber is over and with confidence rising, the
consumer could lead the way, if only wage gains improve," said Joel
Naroff, economist at Naroff Economic Advisors in Holland, Pa.
Stocks paid scant attention to data that showed business
inventories rose 0.4% in February, just shy of expectations for a
0.5% increase.
Citigroup (C) shares rose 4.4% after the bank's first-quarter
results easily topped Wall Street forecasts. Citigroup reported a
3.5% rise in profit, boosted by lower expenses and provisions for
soured loans, even as revenue fell.
U.S. stocks were shellacked last week, with the S&P 500 and
Nasdaq both seeing their biggest weekly losses since mid-2012,
while the Dow saw its biggest weekly fall since mid-March.
The relatively upbeat results from Citigroup stood in contrast
to disappointing results Friday from J.P. Morgan Chase & Co.
(JPM), which contributed to the Friday selloff. Analysts said
earnings and, perhaps more important, sales results continue to
hold the key to near-term direction, particularly in the tech
sector, which has been hardest hit as investors grow worried that
valuations have been stretched too far.
"Weak sales growth is nothing new, but now that the market
appears to believe that valuations are looking rich, investors are
starting to take notice. If companies can't beat sales expectations
in an environment of low interest rates, when can they?" wrote
Kathleen Brooks, research director at Forex.com in London.
"Johnson & Johnson (JNJ), Coca-Cola (KO), Bank of America
(BAC) and Google (GOOG) are some of the blue-chip highlights to
watch out for this week. If they follow J.P. Morgan and disappoint
expectations we could see further downside in the markets" ahead of
the Easter weekend, she said in a note. See: Google, Intel, IBM
outlooks to trump earnings results.
Elsewhere on the corporate front, shares of Herbalife Ltd. (HLF)
rose 6%. Shares had tumbled at the end of last week on news reports
the company is the subject of a criminal investigation by U.S.
authorities. The nutrition-supplement firm said Friday it wasn't
aware of a probe.
Shares of Edwards Lifesciences Corp. (EW) rose 14%. The company
said late Friday it won a preliminary injunction limiting the sale
of Medtronic Inc.'s (MDT) CoreValve system, which had been found by
a federal jury to infringe on an Edwards patent. Medtronic shares
were down 2.1%.
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