By William L. Watts, MarketWatch
NEW YORK (MarketWatch) -- U.S. stocks rebounded 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, pushing the Dow
industrials to triple-digit gains.
Tech stocks took over leadership, pacing the rally heading into
midday.
The Dow Jones Industrial Average (DJI) was up 127.93 points, or
0.8%, at 16,154.68 in recent trade. The S&P 500 (SPX) added
17.41 points, or 1%, to 1,833.10. Read: MarketWatch's stock market
live blog.
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 49 points, or 1.2%, at 4,048.73.
The tone had been set ahead of the opening bell 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% 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. See: Citigroup's stock is
cheap, but should you buy it?
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.
On the tech front, previously hard-hit Internet and social media
stocks were leading the rebound, with Google up 2.3%, Yahoo (YHOO)
gaining 2.4%, Facebook (FB) up 1.3% and Twitter (TWTR) up 2.4%.
Twitter disclosed in a regulatory filing Monday that co-founders
Jack Dorsey and Even Williams and Chief Executive Richard Costolo
had no plans to sell any of their shares. Twitter also disclosed
that Benchmark venture capital funds also told the company they
have no intention to sell or distribute stock to their limited
partners before or immediately after the expiration of a lockup on
May 5.
Elsewhere, shares of Herbalife Ltd. (HLF) rose 9.6%. 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 nearly 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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