U.S. Stocks Rise as Retail Sales, Citigroup Overshadow Oil Slump

U.S. stocks rose, after paring an early rally in the Standard & Poor's 500 Index, as better-than- estimated retail sales and earnings from Citigroup Inc. overshadowed a slump in commodity prices and Apple Inc.

Citigroup soared 3.9 percent as results benefited from a tax benefit and a surge in bond-trading revenue. Texas Instruments Inc. rose 2.4 percent on a report Amazon.com Inc. may buy its mobile chip unit. Valero Energy Corp. and Occidental Petroleum Corp. dropped as much as 1.1 percent as oil tumbled. Apple lost 0.1 percent after rising as much as 0.8 percent earlier.

The S&P 500 added 0.2 percent to 1,431.11 at 11:18 a.m. in New York. The Dow Jones Industrial Average rose 23.20 points, or 0.2 percent, to 13,352.05. Trading in S&P 500 companies was 11 percent above the 30-day average at this time of day.

"The direction of the economic data is positive, but we're moving at a very slow pace and the market is very fragile to external shock," Dan Veru, who oversees $3.5 billion as chief investment officer at Palisade Capital Management LLC in Fort Lee, New Jersey, said in a phone interview. "The big question regarding earnings is whether expectations have come down enough so that companies can beat guidance."

Stocks rose as the Commerce Department said retail sales rose 1.1 in September following a revised 1.2 percent increase in August that was the biggest since October 2010 and larger than previously reported. The median forecast of 77 economists surveyed by Bloomberg called for a 0.8 percent rise.

Oil Slumps

Equities briefly erased gains as oil fell on concern that the global economy is weakening, reducing demand for raw materials. The European Union today tightened sanctions on Iran in a bid to persuade Tehran to permit more international scrutiny of its nuclear program and avert a possible military conflict. Crude futures dropped 1.8 percent on the New York Mercantile Exchange. Gold declined 1.4 percent.

A report today showed manufacturing in the New York region contracted for a third straight month in October as shipments and employment declined. The Federal Reserve Bank of New York's general economic index rose to minus 6.2 from minus 10.4 in September, which was the lowest since April 2009. The median forecast of 46 economists in a Bloomberg survey called for minus 4. Readings of less than zero signal contraction in New York, northern New Jersey and southern Connecticut.

Earnings Season

The S&P 500 sank 2.2 percent last week, the biggest retreat since June 1, as the International Monetary Fund reduced its global growth forecasts and earnings projections from Alcoa Inc. and Advanced Micro Devices Inc. disappointed investors. The benchmark index has rallied 14 percent this year as the Fed announced a third round of bond purchases and companies posted better-than-expected earnings in the first half of 2012.

Some 84 companies in the S&P 500 release results this week, according to data compiled by Bloomberg. Of the 38 companies in the benchmark index that have reported since Oct. 9, 27 posted earnings that exceeded analyst estimates, according to data compiled by Bloomberg.

Citigroup jumped 3.9 percent to $36.12. Chief Executive Officer Vikram Pandit, 55, is cutting jobs and shedding unwanted assets, including a 49 percent stake in Smith Barney, as he seeks to return capital to shareholders and comply with new regulations on buffers against losses. Revenue from fixed-income trading surged 63 percent excluding accounting adjustments after tumbling last year during the European sovereign-debt crisis.

Texas Instruments

Source: http://www.cfoworld.com/operations/49176/us-stocks-rise-retail-sales-citigroup-overshadow-oil-slump

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